EG Q2 Deep Dive: Portfolio Reshaping and Selective Growth Define Results

Global reinsurance company Everest Group (NYSE:EG) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 6.2% year on year to $4.49 billion. Its non-GAAP profit of $17.36 per share was 17.1% above analysts’ consensus estimates.

Is now the time to buy EG? Find out in our full research report (it’s free).

StockStory’s Take

Everest Group’s second quarter results were shaped by a deliberate shift in business mix and disciplined underwriting, with management attributing performance to strong reinsurance profitability and targeted portfolio actions in its insurance segment. CEO James Williamson pointed to “light cat experience and $39 million of favorable prior year development” in reinsurance, while also noting that the insurance business faced ongoing expense pressures from investments in its global platform and a continued runoff of U.S. casualty exposures. The company’s focus on prudent risk selection and conservative loss picks contributed to a stable outcome amid evolving market conditions.

Looking forward, Everest Group’s management expects continued momentum in specialty and international lines, with a focus on scaling profitable segments and leveraging investments made in talent and technology. Williamson emphasized that the company remains “open for business to write well-priced and well-structured casualty accounts,” but will only pursue growth where returns meet threshold expectations. CFO Mark Kociancic added that expense ratios should improve as international operations reach greater scale and the U.S. casualty portfolio remediation concludes. Management believes these actions position Everest for more consistent profitability and operating leverage in the coming periods.

Key Insights from Management’s Remarks

Everest Group’s latest quarter reflected the impact of portfolio repositioning, ongoing investment in growth areas, and evolving market dynamics across its reinsurance and insurance businesses.

• Reinsurance profitability surge: Strong underwriting profit in reinsurance was driven by minimal catastrophe losses and favorable reserve developments, particularly in property lines, supporting a low combined ratio and stable margins.
• Selective casualty reduction: The company aggressively reduced U.S. casualty exposures, cutting approximately $800 million in casualty pro rata business since early 2024, in response to persistent legal challenges and elevated ceding commissions.
• International and specialty growth: Specialty and Accident & Health insurance segments grew 40% and 24% respectively, with the international insurance business achieving 23% growth and improving combined ratios, reflecting strategic investment in global capabilities.
• Expense ratio pressures: Elevated expense ratios in insurance were attributed to slower earned premium growth from the U.S. casualty runoff and continued investment in scaling international operations, which management expects to normalize as these businesses mature.
• Capital deployment balance: Everest continued to return capital to shareholders through share repurchases, while also deploying capital into property catastrophe reinsurance opportunities that management views as offering returns above 25%, particularly in peak geographic zones.

Drivers of Future Performance

Management anticipates that future performance will hinge on continued portfolio optimization, international expansion, and disciplined underwriting in both reinsurance and insurance segments.

• Insurance portfolio realignment: The conclusion of the U.S. casualty runoff is expected to reduce expense pressures and allow the insurance segment to focus on growing higher-margin specialty and short-tail lines, with management stressing that growth in casualty will only resume when pricing and structure are attractive.
• International scaling: Investments in international insurance operations are projected to drive profitability as these businesses gain scale, with a focus on deepening presence in existing markets rather than expanding into new territories, which should improve expense leverage over time.
• Reinsurance market discipline: Management believes property catastrophe reinsurance will remain an attractive use of capital, citing sustained pricing discipline and favorable risk-adjusted returns, but notes that increased competition and potential changes in catastrophe activity could present ongoing risks.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be monitoring (1) the completion of U.S. casualty runoff and its impact on expense ratios, (2) the pace of premium growth and margin improvement in international and specialty insurance lines, and (3) Everest’s ability to capitalize on attractive reinsurance opportunities amid evolving catastrophe risk and competitive dynamics. The ongoing effectiveness of capital management and discipline in underwriting will also be key focus areas.

Everest Group currently trades at $333.24, in line with $334.57 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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