Everest Group Financial Model

For an insurance and reinsurance company, revenue consists of earned premiums and investment income.

• Total assets: Approximately $45 billion to $50 billion.
• Key asset categories: Fixed maturity investments, equity securities, short-term investments, reinsurance receivables, and Deferred Acquisition Costs.
• Goodwill & intangibles: Minimal as a percentage of total assets, as growth has been largely organic.
• Working capital profile: Not applicable in the traditional corporate sense. The company collects premiums upfront and pays claims later, generating massive positive float.
• PP&E: Immaterial. The business is asset-light regarding physical infrastructure.
• Reserves (Liabilities): Unpaid losses and loss adjustment expenses form the largest liability, representing management's estimate of future claim payouts.

• Capex as % of revenue: Less than 1%, primarily related to IT infrastructure and office leases.
• Maintenance capex vs. growth capex: Almost entirely maintenance and system upgrades.
• Major capex programmes underway or planned: None material.
• M&A pattern: Historically an organic grower. The recent divestiture of the retail insurance business to AIG highlights a focus on portfolio optimisation rather than acquisition-led growth.

• Total debt: Conservative leverage profile to maintain rating agency capital requirements.
• Debt/Capital ratio: Typically maintained below 20%.
• Credit rating: A+ (Strong) from Standard & Poor's.
• Key debt instruments: Senior notes and subordinated debt.
• Interest rate profile: Primarily fixed-rate long-term notes.
• Share repurchase programme: Highly active. The company repurchased $397 million of common shares in Q4 2025 and an additional $100 million in January 2026.
• Dividend policy: The company pays a regular quarterly dividend, recently declared at $2.00 per share ($8.00 annualised), representing a yield of approximately 2.3%.

• Operating cash flow conversion: Extremely strong. The company generated $3.1 billion in operating cash flow in 2025.
• Major non-cash items: Depreciation is immaterial. The main bridges from net income to operating cash flow are changes in unearned premium reserves, changes in loss reserves, and deferred taxes.
• Working capital cash flow impact: Premium growth generates immediate operating cash flow due to the upfront collection of premiums.
• Capex intensity: Near zero.
• Cash tax rate vs. GAAP effective tax rate: The effective tax rate is generally low (10% to 15%) due to the Bermuda domicile, though the global minimum tax rules are marginally increasing cash taxes.

1. Assumptions: Hardcoded inputs for premium growth, rate changes, loss ratios, expense ratios, investment yields, and capital return policies.
2. Premiums & Underwriting: A build from Gross Written Premiums to Net Written Premiums to Net Earned Premiums for both the Reinsurance and Insurance segments. Calculates underwriting income.
3. Investment Portfolio: Invested assets roll-forward, yield assumptions by asset class, and the calculation of Net Investment Income.
4. Income Statement: Consolidated profit and loss statement down to Net Income and Earnings Per Share.
5. Balance Sheet: Assets (Investments, Premiums Receivable, Deferred Acquisition Costs) and Liabilities (Loss Reserves, Unearned Premiums, Debt).
6. Cash Flow Statement: Operating, Investing, and Financing cash flows.
7. Capital & Dividends: Shareholders' equity roll-forward, calculation of Book Value Per Share, Return on Equity, and the share repurchase schedule.
8. Valuation: Dividend Discount Model and a Residual Income Model (Price to Book versus Return on Equity framework).

1. `Net Written Premiums = Gross Written Premiums x Retention Ratio`
2. `Net Earned Premiums = Net Written Premiums - Change in Unearned Premium Reserve`
3. `Attritional Losses = Net Earned Premiums x Attritional Loss Ratio`
4. `Catastrophe Losses = Net Earned Premiums x Catastrophe Loss Ratio`
5. `Total Losses and LAE = Attritional Losses + Catastrophe Losses + Prior Year Reserve Development`
6. `Acquisition Expenses = Net Earned Premiums x Acquisition Expense Ratio`
7. `Underwriting Income = Net Earned Premiums - Total Losses and LAE - Acquisition Expenses - Other Underwriting Expenses`
8. `Combined Ratio = (Total Losses and LAE + Acquisition Expenses + Other Underwriting Expenses) / Net Earned Premiums`
9. `Net Investment Income = Beginning Invested Assets x Net Investment Yield`
10. `Net Income = Underwriting Income + Net Investment Income - Interest Expense - Tax Expense`
11. `Ending Shareholders Equity = Beginning Shareholders Equity + Net Income - Dividends Paid - Share Repurchases + Accumulated Other Comprehensive Income`
12. `Book Value Per Share = Ending Shareholders Equity / Ending Shares Outstanding`
13. `Operating Return on Equity = Net Operating Income / Average Shareholders Equity`

The Premiums & Underwriting sheet is the primary engine. It feeds Net Earned Premiums and Underwriting Income to the Income Statement, and it feeds Unearned Premium Reserves and Loss Reserves to the Balance Sheet. The Income Statement generates Net Income, which flows into Retained Earnings on the Balance Sheet and the top line of the Cash Flow Statement. The Cash Flow Statement dictates the change in Cash and Invested Assets, which feeds the Investment Portfolio sheet. The Investment Portfolio calculates Net Investment Income, which flows back to the Income Statement. To prevent circularity, Net Investment Income must be calculated using the beginning balance of Invested Assets.

• Revenue, Premiums, and Investment Income are entered and displayed as positive numbers.
• Expenses (Losses, Acquisition Costs, Operating Expenses) are entered as positive numbers in their respective schedules but subtracted in the Income Statement calculations.
• On the Cash Flow Statement, cash inflows are positive and cash outflows (such as dividends and share repurchases) are negative.
• Margin percentages (Loss Ratio, Combined Ratio) are displayed as positive percentages.

• The company is resegmenting in 2026 from Reinsurance and Insurance to Treaty Reinsurance, Global Wholesale and Specialty, and Other. The model must include a toggle or pro-forma adjustment mechanism to handle this transition.
• Catastrophe losses are highly volatile. Using a single historical average for the loss ratio will fail to capture tail-risk years. The model must separate attritional losses from catastrophe loads.
• Calculating investment income based on average or ending invested assets will create a circular reference with net income and cash flow. Always use beginning-of-period assets for the yield calculation.
• Deferred Acquisition Costs must be amortised in exact proportion to the earning of the related premiums. A mismatch here will distort underwriting margins.
• Prior year reserve development can heavily distort the current year attritional loss ratio. The model must isolate current accident year losses from prior year reserve releases or strengthening.
• Share repurchases significantly impact Book Value Per Share and Earnings Per Share. Ensure the share count reduction is dynamically linked to the repurchase dollar amount divided by the assumed average share price.
• Unearned premium reserves must mathematically bridge Net Written Premiums and Net Earned Premiums. If this formula is broken, the balance sheet will not balance.
• The $150 million restructuring charge planned for 2026 must be excluded from Operating Income to accurately reflect the core Operating Return on Equity.

• The Combined Ratio should be between 90% and 100% in normal years. Flag the model if it exceeds 100% without a modelled catastrophe event.
• Net Investment Yield should align with current fixed income market rates, typically between 4.0% and 5.0%.
• Total Assets must equal Total Liabilities plus Shareholders' Equity in every forecasted period.
• The Debt-to-Capital ratio should remain below 25% to align with rating agency guidance.
• The Net Written Premium to Gross Written Premium retention ratio should remain relatively stable between 80% and 90%.
• Operating Return on Equity should fall within the 10% to 15% range based on recent management targets.
• Book Value Per Share growth should roughly equal Operating Return on Equity minus the dividend yield.

• Filings: SEC EDGAR database for Everest Group (EG) 10-K and 10-Q filings.
• Company Data: Everest Group Investor Relations website for Financial Supplements and Global Triangles.
• Peers: Arch Capital Group (ACGL), RenaissanceRe (RNR), and Axis Capital (AXS) for benchmarking combined ratios and valuation multiples.
• Industry Data: Guy Carpenter or Aon Benfield reinsurance renewal reports for macro pricing trends and catastrophe loss estimates.
• Consensus Estimates: Bloomberg or FactSet for consensus Earnings Per Share and Book Value Per Share estimates.

• Everest Group Q4 2025 and Full Year 2025 Earnings Release (February 4, 2026)
• Everest Group Q4 2025 Earnings Call Transcript (February 5, 2026)
• Everest Group 2024 Annual Report on Form 10-K
• Everest Group 2025 Quarterly Reports on Form 10-Q