By Michael Loney

May 1 - (The Insurer) - Everest Group did not renew half of the casualty insurance premium up for renewal in the first quarter as its remediation of the business continued, while its casualty pro rata premium shrank almost 22% amid “unjustifiably sticky” ceding commissions.

After markets closed on Wednesday, Everest reported operating income per share of $6.45 for the first quarter that missed the $7.59 consensus estimate and was down from $16.32 a year ago.

The GAAP combined ratio of 102.7% was a 13.9 percentage point deterioration from the 88.8% recorded in the first quarter of 2024, and included 13.9 points of catastrophe losses versus 2.3 points in the prior-year period.

New York-listed Everest’s share price was down 3.8% on Thursday as of 10.00 a.m. ET, compared with the previous day’s close of $358.83.

The group’s $4.39 billion in gross written premium was down 0.5% from the $4.41 billion in Q1 2024. Reinsurance GWP was up 1.4% to $3.22 billion while insurance was down 1.3% to $1.15 billion.

On an investor call on Thursday, Everest president and CEO Jim Williamson said: “We're growing at healthy rates where risk-adjusted returns meet or exceed our thresholds. Where pricing is weak relative to risk, we are intentionally shrinking – in some cases rapidly.”

In reinsurance, Williamson highlighted that total premiums increased, driven by 16% growth in property lines (8% excluding reinstatement premiums), offset by continuing actions in the casualty book.

Everest’s reinsurance book shrank marginally at the January 1, 2025 renewal, reflecting 6% property growth offset by cutbacks in casualty. At the April renewal, the book grew by 5% led by property growth of 15%.

“Of note, given our strong value proposition, we continue to grow with our valued Japanese clients at attractive margins despite many programs being oversubscribed,” Williamson said.

The executive said he expects “moderate” cat pricing pressure for the remainder of 2025 but with “ample opportunities” to deploy capital at attractive expected returns.

Casualty pro rata written premium was down almost 22% in the quarter, driven by the portfolio actions taken since the January 1, 2024 renewal.

“Capacity in the casualty quota share market is abundant with many markets taking up risks we view as unprofitable. We believe ceding commissions have been unjustifiably sticky. Barring a change in the environment, our book will continue shrinking,” Williamson said.

CASUALTY INSURANCE RATES UP 20% IN Q1

For insurance, property premium grew 19% and specialty businesses grew 16%, offset by a 15% decline in the third-party book driven by the remediation of the U.S. casualty portfolio.

“That remediation is proceeding according to plan and as I laid out on prior calls,” said Williamson.

“In Q1, 50% of casualty written premium with renewal dates in the quarter was not renewed. This is more than prior quarters, but we are not budging on the changes needed to reach target profitability in one renewal cycle,” he continued.

Williamson said around $150 million of casualty premium was not renewed in the quarter.

Casualty rate increases averaged approximately 20% across commercial auto, general liability and excess umbrella, which Williamson said is “consistently above our conservative assumption for loss trend”.

He described Q4 2024 through Q2 2025 as “peak remediation” for Everest’s casualty book and said the process will be completed by Q4.

Property insurance pricing in the U.S. is declining from previous highs but Everest believes it is adequate and will continue to be for the foreseeable future.

Williamson also revealed that Everest has completed a thorough assessment of its exposure to the new tariff regime, “and we believe prolonged tariffs at current levels would put modest upward pressure on loss cost trend”.

“Our frequent analysis of trend assumptions will allow us to respond quickly should inflation creep upward,” he said.