Everest Group, Ltd. (EG) Q3 2026 earnings review
Everest adds $600 million to casualty reserves, while buybacks lift per-share profit
Everest Group, the Bermuda reinsurance and specialty insurance company, posted an underwriting loss while investment income and buybacks lifted per-share profit. The insurer added roughly $600 million to its casualty reinsurance reserves after a $200 million charge last quarter, and global disasters cost another $322 million. Those hits pushed the core combined ratio to 106%, meaning core underwriting lost money, while earned premiums fell 18% as Everest exits retail insurance.
| Core gross written premiums (comparable) | $3.65B -4.0% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $7.62 +1.1% from a year ago |
| Core combined ratio | 105.8% 88.9% a year ago |
| Share repurchase floor | Unchanged $474M bought back vs $300M floor |
⚖️ Verdict: 🔴 Bearish
The story got worse because the annual reserve review uncovered a much larger hole in casualty reinsurance than last quarter's pre-emptive charge suggested. Unlike the commercial insurance book, those reinsurance policies have no outside insurance cap to absorb extra claims. On the positive side, $474 million of share buybacks and a 17% jump in investment income grew book value per share excluding bond swings by 12% from a year ago.
The question now is whether the $800 million of casualty reinsurance charges over the past two quarters finally puts the reserve problems behind the company. Either the new actuarial team has cleared the deck so buybacks can compound book value, or rising US lawsuit payouts will force more charges as premium volume shrinks. Fourth-quarter reserve development and the published loss triangles will tell.
🐂 Bull Case
Buybacks Keep Per-Share Profit Growing
Everest is shrinking its insurance book and using the freed-up cash to buy back its own stock. Chief executive Jim Williamson said that "share repurchases remain a top priority" as the company heads into 2027. The Bermuda-based insurer bought back $474 million of common shares this quarter, well above its $300 million quarterly floor, bringing nine-month repurchases to $1.2 billion.
- Diluted share count: 37.6 million, down 9.2% from a year ago
- Profit per share, excluding one-offs: $7.62, up 1.1% from a year ago
- Book value per share, excluding bond price swings: $414.00, up 12.4% from a year ago
Those buybacks matter because they turn a drop in total profit into a gain for each remaining share. Operating profit excluding one-offs fell 8.2% to $290 million, but the smaller share count lifted profit per share. What to watch: fourth-quarter share repurchases once the Canadian retail sale closes. Stay above $300 million and per-share value keeps compounding even while total premium volume shrinks.
Specialty Growth and Investment Income Offset Reinsurance
While Everest cuts back on casualty reinsurance, it is growing Global Wholesale & Specialty, its commercial specialty insurance division, and earning more on its $44.0 billion investment portfolio. Underlying gross written premiums in the specialty unit rose 3.2% to $948 million, led by a 27.5% jump in financial lines and 21.5% growth in specialty coverage.
Excluding catastrophe losses and prior-year reserve changes, the specialty unit's loss ratio improved by 0.9 percentage points to 60.0%. Meanwhile, net investment income rose 17.4% from a year ago to $634 million, helped by "higher alternative investment returns". Together, specialty underwriting profit of $19 million and investment income covered the $223 million group underwriting loss. What to watch: fourth-quarter net investment income, as private partnership returns fluctuate from quarter to quarter.
🐻 Bear Case
Treaty Casualty Needed Another $600 Million Charge
"Our Reinsurance Treaty team is navigating the market cycle with the highest level of discipline, while leveraging its expertise and competitive advantages to maintain our focus on bottom-line results," chief executive Jim Williamson said. Reinsurance Treaty, the division that insures other insurance companies, posted a $191 million underwriting loss this quarter after completing its annual review of older policies.
The company booked $253 million of net unfavorable prior-year reserve development in the treaty division. That net figure included "gross casualty reserve strengthening of approximately $600 million, on top of the over $200 million of reserve strengthening in 2Q26". By our math, Everest used about $347 million of reserve releases from other lines to soften the blow.
This charge cuts against management's past assurances because the reinsurance book is not covered by the insurance policy Everest bought last year to cap older North American casualty losses. Adding $253 million to reserves added 11.3 percentage points to the division's combined ratio, pushing it to 108.5%. What to watch: fourth-quarter prior-year reserve development across the group. Another charge would show that the third-quarter review still did not catch all older casualty claims.
Shrinking Premiums Lift the Expense Ratio
Everest is deliberately walking away from underpriced casualty business and exiting retail commercial insurance. In Reinsurance Treaty, gross written premiums fell 24.8% in excess-of-loss casualty and 15.8% in pro-rata casualty, while property premiums dipped 1.8% on a comparable basis. Across the whole company, net written premiums dropped 20.9% from a year ago to $2.97 billion.
As those smaller sales work through the balance sheet, net premiums earned — the revenue Everest recognizes each quarter as coverage runs off — fell 18.1% to $3.16 billion. Overhead costs are not falling as fast. In the core businesses, other underwriting expenses rose 0.6 percentage points to 5.2% of earned premiums, and the specialty unit's total expense ratio rose 1.2 percentage points to 33.7%. What to watch: the core underwriting expense ratio in the fourth quarter, as earned premiums keep contracting.
Catastrophe Losses Pushed Core Underwriting Into Loss
After a quiet first half for natural disasters, global weather and geopolitical events hit third-quarter underwriting results. Pre-tax catastrophe losses, net of reinsurance recoveries and reinstatement premiums, jumped to $322 million across the group from $50 million a year ago. In Reinsurance Treaty, catastrophe losses reached $277 million, driven by the Colombia earthquake, events in the Middle East, and global storms.
Those disaster claims added 10.6 percentage points to the core combined ratio, up from 1.5 percentage points a year ago. In the treaty segment, the 12.8 percentage point catastrophe burden exceeded the roughly 8 percentage point annual budget management set last quarter. Combined with the casualty reserve charge, disasters pushed core combined ratio to 105.8% (a ratio above 100% means underwriting lost money). What to watch: fourth-quarter catastrophe losses, which will determine whether full-year disaster claims stay within the annual budget.
Risks This Quarter Didn't Answer
Four standing concerns could not be read from the third-quarter earnings release because the details live in the quarterly filing or conference call.
- Property reinsurance pricing: the release shows treaty property premiums down 1.8%, but renewal rate changes wait for the call.
- Annapurna Re sidecar cessions: quarterly premiums ceded to the third-party vehicle (targeted at $200 million) appear in the 10-Q footnotes.
- Bermuda group capital rules: any effect from the January 2027 supervision transition was not mentioned in the release.
- Global minimum tax impact: net income tax assets rose to $1.32 billion, but any Pillar Two valuation allowance update awaits the 10-Q.
👓 Other Themes
Exit From Retail Insurance Remains on Track
Everest is winding down its commercial retail insurance policies after selling the renewal rights to AIG last year. Legacy segment net premiums earned fell 61.4% from a year ago to $208 million and "remain on track with our expectations following the announcement of the renewal rights transaction". Beginning this quarter, management also updated its operating profit metric to exclude $18 million of after-tax divestiture and restructuring costs.
💲 Other KPIs
Unearned premium reserve — premiums collected for coverage not yet provided — fell 14.4% from a year ago and dipped $27 million from last quarter. The balance has declined for four straight quarters as Everest exits retail commercial insurance and writes less casualty reinsurance, which reduces future earned revenue.
By our math, third-quarter operating cash flow fell 54.3% from a year ago to $667 million, bringing the nine-month total to $1.61 billion against $3.47 billion last year. Lower premium collections and claim payouts on the run-off retail book reduced cash generation, leaving less internal cash to fund share buybacks.
Net loss reserves in the run-off Legacy segment before adverse development cover — the unpaid claims Everest is working to settle — fell 6.7% from $6.31 billion a year ago. Settling these claims without major cost overruns frees up capital to support the company's share repurchases.
🔮 Guidance
Unchanged. Everest targets a mid-teens annual growth rate in book value per share (excluding bond price swings) plus dividends over the market cycle. Annualized return reached 14.2% for the first nine months of 2026, down from 16.8% at the half-year mark because the third-quarter casualty reserve charge slowed book value growth.
Unchanged. Chief executive Jim Williamson reiterated that share repurchases remain a top priority. The group has beaten its $300 million quarterly floor in all three quarters of 2026 ($331 million, $395 million, and $474 million), averaging a 33.3% beat by our math.
Unchanged. The insurer stated that third-quarter earned premiums in the Legacy segment ($208 million) remained on track with expectations following the retail renewal rights sale. By our math, the $250 million second-half plan leaves only about $42 million of Legacy earned premiums for the fourth quarter.
❓ Key Questions
Which accident years drove the $600 million casualty reserve charge?
Reinsurance Treaty booked $600 million of gross casualty reserve strengthening on top of $200 million last quarter, offset by about $347 million of releases elsewhere. Investors need to know which accident years deteriorated and how much property reserve cushion remains.
How much premium did Everest cede to Annapurna Re?
Management previously targeted about $200 million of quarterly ceded premiums to its new Annapurna Re sidecar, which lowers retained casualty risk and reduces net investment income. The earnings release did not disclose the third-quarter cession figure.
When will the Canadian retail sale release capital for buybacks?
Nine-month share repurchases ($1.20 billion) and dividends ($233 million) consumed nearly 90% of operating cash flow ($1.61 billion). Sustaining buybacks above $300 million a quarter depends on closing the Canadian retail divestiture in the second half and releasing Legacy capital.
How much did property catastrophe rates fall at recent renewals?
Reinsurance Treaty comparable property premiums dipped 1.8% from a year ago. With global catastrophe losses rising to $322 million this quarter, investors need to hear how pricing held up heading into the January 1 renewal season.