Everest Group added about $600 million gross to its casualty reinsurance reserves in the third quarter, concentrated in underwriting years 2022 and prior, after more than $200 million in the second quarter, and reported a pre-tax underwriting loss of $223 million for the three months to September 30, Everest said on October 28.
The charge came out of the company's annual long-tail reserve studies, the first run by Chief Financial Officer Elias Habayeb and Katy Bradica, the new Group Chief Actuary. "The vast majority of the development was in underwriting years 2022 and prior, where we added conservatism to each underwriting year," Habayeb said on the October 29 earnings call. "In addition, we also rolled that experience forward into the more recent underwriting years."
The second-quarter charge was booked ahead of those studies, in North America casualty treaty business, and the Q3 result is the first since Everest completed them. The results land a month after Munich Re board member Stefan Golling told The Insurer that US liability loss development for underwriting years 2014 to 2019 was still rising sharply and that "we should not be surprised if the market will continue to report further reserve strengthening," The Royal Gazette reported on October 29.
Key Takeaways
- Everest added about $600 million gross to casualty reinsurance reserves in Q3, after more than $200 million in Q2, mostly in underwriting years 2022 and prior.
- Booked reserves now sit more than $850 million above the actuarial central estimate, up about $300 million since June, Chief Financial Officer Elias Habayeb said.
- Reinsurance Treaty ran a 108.5% combined ratio against 87.0% a year earlier, with 11.3 points of adverse development and 12.8 points of catastrophe losses.
- Group net unfavorable development was $268 million, or 8.5 points, after Everest held back most of its favorable short-tail emergence.
- About two-thirds of the $600 million came from North America casualty, weighted to casualty pro rata, Habayeb said.
What the charge covers
The $600 million sits entirely in the Reinsurance Treaty segment. Asked to unpack it, Habayeb said "about two-thirds of it is coming from North America casualty, and it's heavy to your kind of traditional casualty pro rata, some elements in casualty XL, and the rest was kind of more mixed globally." Casualty as Everest reports it includes professional lines, and some professional lines reserves were strengthened within the total, he said.
The gross figure is larger than the development Everest reported. Net unfavorable prior-year development was $253 million in Reinsurance Treaty, 11.3 points of the segment's combined ratio, and $268 million for the group, 8.5 points, against $478 million and 12.4 points in Q3 2025, when the hit sat in the insurance book. The difference is short-tail releases: "While loss emergence in short tail lines continues to be favorable, we held back the majority of the favorable development as we look to enhance our conservative position," Habayeb said, putting year-to-date short-tail releases at about $500 million.
The adverse development cover Everest bought from Longtail Re in 2025 does not touch the treaty charge. Splitting the insurance reserve studies into separate Global Wholesale and Specialty and Legacy reviews produced "de minimis net overall reserve movement with no meaningful change to reserve subject to the ADC," Habayeb said, leaving about $1 billion of net limits under the cover. Global Wholesale and Specialty booked no prior-year development in the quarter; Legacy booked $14 million outside the ADC, from two mid-sized property losses, the release said.
Habayeb described the process behind the numbers as a refresh of expected loss ratios and loss development factors across all years "with added conservatism," finer line-of-business segmentation, and no credit for recent underwriting actions or for case-reserve strengthening visible in cedent data "unless definitively evident in the data." The studies left 2026 loss picks unchanged. Fourth-quarter reviews still to come cover parts of the international insurance business, cyber and "a couple of smaller lines," he said, with financial lines largely done this quarter.
The quarter's numbers
The group combined ratio was 107.1%, against 103.4% a year earlier, with the attritional combined ratio improving to 88.4% from 89.6% and the attritional loss ratio to 58.3% from 59.9%. Pre-tax catastrophe losses were $322 million net of recoveries and reinstatement premiums, 10.5 points, against $50 million in Q3 2025, driven by the Colombia earthquake, events in the Middle East and weather losses, the release said.
| Q3 2026 | Reinsurance Treaty | Global Wholesale & Specialty | Group |
|---|---|---|---|
| Combined ratio | 108.5% (87.0%) | 97.3% (95.5%) | 107.1% (103.4%) |
| Attritional combined ratio | 84.9% (86.0%) | 93.7% (93.4%) | 88.4% (89.6%) |
| Attritional loss ratio | 56.3% (56.8%) | 60.0% (60.9%) | 58.3% (59.9%) |
| Prior-year development | $253M, 11.3 pts | $0 | $268M, 8.5 pts |
| Catastrophe losses, pre-tax net | $277M | $25M | $322M |
| Pre-tax underwriting result | $(191)M | $19M | $(223)M |
Sources: Everest Group Q3 2026 earnings release, October 28, 2026. Prior-year quarter in parentheses. Group figures include Legacy, which lost $51 million.
Reinsurance Treaty's underwriting loss of $191 million compares with $335 million of income a year earlier. Global Wholesale and Specialty earned $19 million against $33 million, with 3.5 points of catastrophe losses against 0.8 a year earlier. Chief Executive Jim Williamson said the segment's 97.3% was "prudently positioned at the high end of our expected range in the mid to high 90s for the full year."
Net income was $233 million, or $6.12 per diluted share, against $255 million, and net operating income $290 million against $316 million. Net investment income reached a record $634 million, up from $540 million, on alternative investment returns. Everest repurchased $474 million of shares in the quarter and $1.2 billion year to date, and Habayeb said $300 million a quarter is a floor for buybacks. Book value per share was $381.04 at September 30, or $414.00 excluding unrealized gains and losses on the fixed-maturity portfolio.
Casualty pricing and the January renewal
Reinsurance Treaty gross written premium fell 6.2% on a comparable basis to $2.7 billion, with casualty lines down 18%, Williamson said; Reinsurance News put casualty excess of loss down 24.8% and casualty pro rata down 15.8%. Global Wholesale and Specialty grew 3.2% to $948 million.
"Our view of casualty reinsurance is a fairly bearish one," Williamson said when KBW analyst Meyer Shields asked about the outlook. "The underlying environment remains very challenging. That's driven by social inflation and legal system abuse in the U.S. The plaintiffs bar has not let up on their aggression in that space." Rate in a number of areas "continues to stay abreast of loss trend," he said, but competition is building, new entrants in primary liability "are kidding themselves a little bit" about rate adequacy, and ceding commissions "are stubbornly high" and "not justified by the underlying performance." Everest will not try to regrow the casualty portfolio "until conditions improve materially," he said.
On property, Williamson expects January 1, 2027 conditions to remain competitive. Growth in the quarter came from specialty lines, which Everest reports as rate adequate, and from international business.
Habayeb told analyst Michael Zaremski that the three rating agencies' negative outlooks on Everest reflect reserve volatility rather than balance-sheet strength, and that the quarter's actions "contribute to more stable reserves and lower reserve volatility going forward." The agencies were briefed before the call. Shields asked whether Everest would republish its year-end loss triangles to reflect the strengthening booked so far this year. "We'll take it under consideration," Habayeb said; the remaining fourth-quarter studies come first.
Further Reading
- Everest Q2 2026: An 88.5% Treaty Combined Ratio in a Softening Reinsurance Market: the segment's result one quarter earlier.
- Q2 2026 Casualty Reserves: Chubb and Travelers Release While Everest and CNA Build: the $200 million second-quarter charge in its peer context.
- Reading Casualty Triangles After Record 2024 Adverse Development: how the 2022-and-prior years read in the triangles.
- Umbrella Pricing Holds at 9.4% as Other Commercial Lines Soften: Why ILFs Need Re-Derivation: the severity trend behind casualty excess layers.
Sources
- Everest Group, Ltd., "Everest Reports Third Quarter 2026 Results," Form 8-K exhibit, October 28, 2026
- Everest Group Q3 2026 earnings call transcript, October 29, 2026 (The Motley Fool)
- The Royal Gazette, "Everest moves to strengthen casualty reserves," October 29, 2026
- Reinsurance News, "Everest posts Q3'26 underwriting loss amid casualty reinsurance reserve strengthening," October 29, 2026