ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Overview.
Everest is a global underwriting leader providing best-in-class property, casualty and specialty reinsurance and insurance solutions. As part of the Standard & Poor’s (“S&P”) 500 Index, we are a leading financial services institution focused on value creation for our shareholders while diversifying our portfolio and geographic presence. Through our direct and indirect subsidiaries operating in the U.S. and internationally, we serve a diverse group of clients worldwide, providing what we believe are extensive product and distribution capabilities, a strong balance sheet, an innovative culture and access to world-class talent.
During 2024, we formed a new “Other” segment, primarily comprised of the results of our sports and leisure business sold in October 2024, consisting of policies written prior to the sale and polices renewed and certain new business written on the Company’s paper post-sale. It also includes run-off asbestos and environmental (“A&E”) exposures, certain discontinued insurance programs primarily written prior to 2012 and certain discontinued insurance and reinsurance coverage classes. The Other segment does not generally sell insurance or reinsurance products but is responsible for the management of existing policies and settlement of related losses. These segment presentation changes have been reflected retrospectively. As of December 31, 2025, the Company has two reportable segments consistent with how the business is managed. See Note 7 of the Notes to the Consolidated Financial Statements for a summary of segment results.
Our net income of $1.6 billion for the year ended December 31, 2025 is inclusive of unfavorable development of prior-year loss reserves of $657 million. Our net income of $1.4 billion for the year ended December 31, 2024 is inclusive of unfavorable development of prior-year loss reserves of $1.5 billion. We have significantly fortified our U.S. casualty reserves, while taking aggressive underwriting action in certain classes exposed to social inflation, bolstering talent and investing in our platform as we head into 2026. In addition, we have entered into an adverse development reinsurance agreement reinsuring potential adverse loss development for accident years 2024 and prior arising out of North American liabilities within our Insurance and Other Segments and sold the renewal rights to certain lines of commercial retail insurance business. Refer to management’s discussion of consolidated and segment results below.
The following is a discussion and analysis of our results of operations, financial condition and liquidity and capital resources for the years ended December 31, 2025 and 2024. This discussion should be read in conjunction with the consolidated financial statements and related notes, under ITEM 8 of this Form 10-K. Comparisons between 2024 and 2023 have been omitted from this Form 10-K but can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Form 10-K for the year ended December 31, 2024.
All comparisons in this discussion are to the corresponding prior year unless otherwise indicated.
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Recent Developments.
Adverse Development Cover Reinsurance Agreements
Effective October 1, 2025, the Company, through its subsidiaries Everest Re and Bermuda Re (the “Ceding Companies”), entered into adverse development reinsurance agreements with State National Insurance Company, Inc. and MS Transverse Insurance Company (collectively the “Reinsurers”). The Reinsurance Agreements are supported on a retrocessional basis by Longtail Re, an affiliate of Stone Ridge Capital.
The agreements reinsure potential adverse loss development for accident years 2024 and prior arising from substantially all of the Ceding Companies’ North American liabilities within the Insurance and Other segments (“Subject Business”) up to a gross limit of $1.2 billion. Certain liabilities are excluded from the subject business, including among others those related to the Asbestos and Environmental (“A&E”) reserves included in the Other segment. The carried reserves held for the Subject Business were $5.4 billion as of September 30, 2025 and $5.0 billion as of December 31, 2025, respectively.
The adverse development cover (“ADC”) is composed of three layers. The first layer is an “in the money” layer whereby the ADC attachment point was $1,250 billion below the Company’s North American Insurance and Other segment liability subject reserves of $5.4 billion held as of September 30, 2025. The second layer is $700 million in excess of the $5.4 billion. The Company transferred $1,250 million of in-the-money reserves in consideration for the first two layers upon closing of the transaction. The third layer is $500 million, for which the Company paid approximately $122 million of consideration upon closing of the transaction. The Company has a co-participation of $100 million in each of the second and third layers. For more details, see Form 8-K filed with the SEC on October 27, 2025 and the adverse development reinsurance agreements attached thereto and incorporated by reference in Exhibits 10.59 and 10.60. At December 31, 2025, the total covered losses ceded to State National Reinsurer were $1,253 million. The aggregated unexpired limit was $597 million for State National Reinsurer and $400 million for MS Transverse Reinsurer, respectively.
Sale of Certain Commercial Retail Insurance Renewal Rights
On October 26, 2025, the Company entered into an agreement with American International Group, Inc. (“AIG”) to sell the renewal rights for certain lines of commercial retail insurance business written by the Company in the U.S., U.K. and Asia Pacific, for an aggregate purchase price of $252 million. AIG paid the Company $30 million for originating and structuring the transaction.
In addition, on October 26, 2025, the Company entered into an agreement with AIG to sell the renewal rights for certain lines of commercial retail insurance business written by the Company in certain countries in the European Union, for an aggregate purchase price of $49 million.
Under the agreements, AIG agreed to pay the Company a total of $10 million per month for nine months starting January 1, 2026 for specified transition services. For more details, see Form 8-K filed with the SEC on October 28, 2025 and the Master Transaction Agreements incorporated by reference in Exhibit 10.59.
These transactions sharpen the Company’s focus on its core global reinsurance business as well as its global wholesale and specialty insurance businesses. The renewal rights of these businesses total an estimated $2 billion of aggregate gross premiums written.
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Financial Summary.
We monitor and evaluate our overall performance based upon financial results. The following table displays a summary of the consolidated net income (loss), ratios and shareholders’ equity for the periods indicated:
Years Ended December 31,
Percentage Increase/(Decrease)
(Dollars in millions)
Gross written premiums
Net written premiums
REVENUES:
Premiums earned
Net investment income
Net gains (losses) on investments
Other income (expense)
Total revenues
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
Commission, brokerage, taxes and fees
Other underwriting expenses
Corporate expenses
Interest, fees and bond issue cost amortization expense
Total claims and expenses
INCOME (LOSS) BEFORE TAXES
Income tax expense (benefit)
NET INCOME (LOSS)
RATIOS:
Point Change
Loss ratio
Commission and brokerage ratio
Other underwriting expense ratio
Combined ratio
At December 31,
Percentage Increase/(Decrease)
(Dollars in millions, except per share amounts)
Balance sheet data:
Total investments and cash
Total assets
Loss and loss adjustment expense reserves
Total debt
Total liabilities
Shareholders' equity
Book value per share
(NM - not meaningful)
(Some amounts may not reconcile due to rounding.)
Revenues.
Premiums. Gross written premiums decreased by 2.9% to $17.7 billion in 2025, compared to $18.2 billion in 2024, reflecting a $288 million, or 5.7% decrease in our insurance business, a $122 million, or 57.3% decrease in business within the Other segment and a $116 million, or 0.9% decrease in our reinsurance business. The decrease in insurance premiums reflects portfolio actions taken in casualty lines of business partially offset by growth in accident and health and other specialty lines. Gross written premiums within Other decreased by $122 million as this segment generally represents lines of business that have been discontinued. The decrease in reinsurance premiums was primarily due to North America casualty pro rata and casualty excess of loss lines of business, partially offset by an increase in the property and financial lines of business.
Net written premiums decreased by 1.9% to $15.5 billion in 2025, compared to $15.8 billion in 2024, primarily driven by overall mix of business.
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Premiums earned increased by 2.5% to $15.6 billion in 2025, compared to $15.2 billion in 2024. The change in premiums earned relative to net written premiums was primarily the result of timing as the higher base premium written in 2024 is being earned through the 2025 period; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period.
Other Income (Expense). We recorded other expense of $45 million and other income of $121 million in 2025 and 2024, respectively. The change was primarily the result of fluctuations in foreign currency exchange rates, in particular, the movement in the Euro and British Pound Sterling, partially offset by the gain from the sale of the renewal rights.
The following table shows the components of other income (expense) for the periods indicated:
Years ended December 31,
(Dollars in millions)
Mt. Logan cell income
Foreign currency exchange income (expense)
Gain on pension plan settlement
Gain (loss) from sale of renewal rights
Gain (loss) from sale of sports and leisure business
Other
Total other income (expense)
Claims and Expenses.
Incurred Losses and Loss Adjustment Expenses (“LAE”). The following table presents our incurred losses and LAE for the periods indicated:
Years Ended December 31,
(Dollars in millions)
Current
Year
Ratio %/
Pt Change
Prior
Years
Ratio %/
Pt Change
Total
Incurred
Ratio %/
Pt Change
Attritional
Catastrophes
Total segment
Attritional
Catastrophes
Total segment
Attritional
Catastrophes
Total segment
Variance 2025/2024
Attritional
pts
pts
pts
Catastrophes
pts
pts
pts
Total segment
pts
pts
pts
Variance 2024/2023
Attritional
pts
pts
pts
Catastrophes
pts
pts
pts
Total segment
pts
pts
pts
(Some amounts may not reconcile due to rounding.)
Incurred losses and LAE decreased by 3.9% to $10.9 billion in 2025, compared to $11.3 billion in 2024, primarily due to a decrease in unfavorable development on prior year attritional losses of $725 million and a decrease of $73 million in
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current year catastrophe losses, partially offset by an increase of $308 million in current year attritional losses and a decrease in favorable development on prior year catastrophe losses of $45 million.
The increase in current year attritional losses was mainly due to the strengthening of U.S. casualty reserves. Unfavorable development on prior year attritional losses was $751 million in 2025 compared to unfavorable development of $1.5 billion in 2024. The net unfavorable development on prior year attritional reserves of $751 million in 2025 is comprised of $471 million of unfavorable development on prior years attritional losses from the Insurance segment due to reserve strengthening in U.S. casualty lines of business driven by elevated loss experience in excess casualty and U.S. liability lines primarily on accident years 2022-2024, and $163 million of unfavorable development in our Other segment which was driven by U.S. casualty lines, primarily from our sports and leisure business. In addition, the Reinsurance segment recorded unfavorable development on prior year, primarily related to aviation associated with the Russia/Ukraine war and casualty reserves, partially offset by development booked on well-seasoned reserves in the property and mortgage lines. Embedded in the amounts noted above is $122 million of prior year related to the ADC.
The current year catastrophe losses of $819 million in 2025 related primarily to the 2025 Southern California wildfires ($512 million), Hurricane Melissa ($159 million), the 2025 Australian Storms ($47 million), Myanmar earthquake ($28 million), Typhoon Ragasa ($20 million) and the 2025 U.S. September floods ($19 million), with the remaining losses resulting from various events. The $893 million of current year catastrophe losses in 2024 related primarily to Hurricane Milton ($320 million), Hurricane Helene ($94 million), Hurricane Beryl ($64 million), Hurricane Debby ($56 million), the 2024 European flood Boris ($56 million), the 2024 Baltimore bridge collapse ($55 million), the third quarter 2024 Calgary Alberta storms ($54 million), the 2024 Brazil Floods ($41 million), the 2024 Dubai floods ($32 million), the 2024 Germany floods ($31 million), the 2024 New Caledonia Riots ($31 million) and the 2024 Taiwan earthquake ($27 million), with the remaining losses resulting from various events. For 2025, the favorable development on prior year catastrophe losses of $94 million was mainly related to reserves released related to the 2022 Hurricane Ian event.
Catastrophe losses and loss expenses typically have a material effect on our incurred losses and LAE results and can vary significantly from period to period. Losses from natural catastrophes contributed 5.3 percentage points to the combined ratio in 2025, compared with 5.9 percentage points in 2024.
Refer to the “Ratios” section for loss ratio analysis discussion.
Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased by 4.9% to $3.5 billion for the year ended December 31, 2025 compared to $3.3 billion for the year ended December 31, 2024. The increase was primarily due to the impact of the increase in premiums earned and changes in the mix of business. Refer to the “Ratios” section for commission and brokerage ratio analysis discussion.
Other Underwriting Expenses. Other underwriting expenses were $1.0 billion and $938 million in 2025 and 2024, respectively. The increase in other underwriting expenses was mainly due to the impact of the increase in premiums earned as well as strategic actions taken in insurance operations. Refer to the “Ratios” section for other underwriting expense ratio analysis discussion.
Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were $109 million and $95 million for the years ended December 31, 2025 and 2024, respectively. The increase in 2025 compared to 2024 was primarily due to an increase in other professional services related to consulting fees for corporate initiatives and an increase in lease rent expenses.
Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was $151 million and $149 million in 2025 and 2024, respectively. The increase was primarily driven by higher interest costs on the Federal Home Loan Bank of New York (“FHLBNY”), partially offset by the change in the floating interest rate related to the Company’s outstanding fixed to floating rate long-term subordinated notes, which is reset quarterly per the note agreement. The floating rate was 6.50% as of December 31, 2025, compared to 7.17% as of December 31, 2024.
Income Tax Expense (Benefit). Income tax expense was $296 million and $120 million in 2025 and 2024, respectively. An income tax expense/benefit is primarily a function of the geographic location of the Company’s pre-tax income and the statutory tax rates in those jurisdictions. The effective tax rate (“ETR”) is primarily affected by tax-exempt investment income, foreign tax credits and dividends. Variations in the ETR generally result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net capital gains (losses), among jurisdictions with different tax rates.
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On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (the “2023 Act”), which will apply a 15% corporate income tax to certain Bermuda businesses in fiscal years beginning on or after January 1, 2025. The 2023 Act includes a provision referred to as “The Economic Transition Adjustment” (the “ETA”), which is intended to provide a fair and equitable transition into the new tax regime, and results in a deferred tax benefit for the Company. However, on January 15, 2025, the OECD issued guidance related to “deferred tax assets arising from tax benefits provided by General Government” whereby it has restricted the utilization of those deferred tax benefits against the computation of its Pillar Two Global Minimum Taxes to approximately 20% of the originally calculated amounts and only for a grace period of two years through 2026. If the Bermuda Ministry of Finance amends The 2023 Act in response to this guidance, the exact impact of any such amendments is uncertain but there is a risk that it results in a reduction in the Company's Deferred Tax Assets.
On July 4, 2025, the One Big Beautiful Bill was signed into law. The One Big Beautiful Bill did not have a material impact on our results of operations, financial condition, or cash flows upon enactment in 2025, and we do not expect it to have a material impact in the future; however, we will continue to evaluate the impact of the One Big Beautiful Bill.
On January 20, 2025, President Trump issued a memorandum announcing that the OECD framework has “no force or effect in the United States” and disavowing any commitments previously made by the United States with respect to the framework. The memorandum also directs the U.S. Secretary of the Treasury to develop and present to President Trump a list of protective measures or other options towards foreign countries that are either not in compliance with any tax treaty with the United States or have tax rules that are “extraterritorial or disproportionately affect American companies.” The possible uneven enactment of the OECD framework by various jurisdictions coupled with the United States’ response to these rules could cause uncertainties to and increases in our income taxes.
On January 5, 2026, the OECD released Administrative Guidance containing the side-by-side (SbS) package on the OECD’s global minimum tax. The SbS Administrative Guidance introduced, among other things, new safe harbors, including a SbS safe harbor for multi-national groups headquartered in certain eligible jurisdictions, now limited to the US. Qualification for this safe harbor would exempt companies from the OECD global minimum tax. We expect additional Administrative Guidance in the future providing implementation guidance on the SbS. Accordingly, the OECD’s global minimum tax could be subject to further changes that will continue to cause uncertainties related to income taxes payable by our company.
Net Income (Loss).
Our net income was $1.6 billion and $1.4 billion in 2025 and 2024, respectiv ely. The period over period changes in net income were primarily driven by the financial component fluctuations explained above.
Ratios.
Our combined ratio decreased by 3.7 points to 98.6% in 2025, compared to 102.3% in 2024. The current year decrease is primarily due to lower unfavorable prior year development on attritional losses and lower current year catastrophe losses.
The loss ratio component decreased by 4.6 points to 69.8% in 2025, compared to 74.4% in 2024. The decrease was mainly due to a decrease of $73 million in current year catastrophe losses and lower unfavorable prior year development on attritional losses.
The commission and brokerage ratio components increased to 22.2% in 2025, compared to 21.7% in 2024. The increase was mainly due to changes in the mix of business.
The other underwriting expense ratio increased to 6.6% in 2025, compared to 6.2% in 2024. The increase was due to higher Insurance segment expenses driven by strategic actions, offset by Reinsurance segment continued leverage against its premium base.
Shareholders’ Equity.
Shareholders’ equity increased by $1.6 billion to $15.5 billion at December 31, 2025 from $13.9 billion at December 31, 2024, principally as a result of $1.6 billion of net income, $854 million of unrealized appreciation on fixed income available for sale securities, net of tax and $242 million of net foreign currency translation gains, partially offset by $797 million of share repurchases and $335 million of shareholder dividends.
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Consolidated Investment Results
Net Investment Income.
Net investment income increased by 8.7% to $2.1 billion in 2025, compared with net investment income of $2.0 billion in 2024. The increase was primarily the result of an increase of $91 million in fixed maturities, an increase of $71 million in income from limited partnerships and an increase of $20 million in income from other alternative investments. The limited partnership income primarily reflects changes in their reported net asset values. As such, until these asset values are monetized and the resultant income is distributed, they are subject to volatile results of future increases or decreases in the asset value.
The following table shows the components of net investment income for the periods indicated:
Years Ended December 31,
(Dollars in millions)
Fixed maturities
Equity securities
Short-term investments and cash
Other invested assets
Limited partnerships
Other
Gross investment income before adjustments
Funds held interest income (expense)
Future policy benefit reserve income (expense)
Gross investment income
Investment expenses
Net investment income
(Some amounts may not reconcile due to rounding.)
The following tables show a comparison of various investment yields for the periods indicated:
Annualized pre-tax yield on average cash and invested assets
Annualized after-tax yield on average cash and invested assets
Annualized return on invested assets
Fixed income portfolio total return
Bloomberg U.S. Aggregate Index
Common equity portfolio total return
S&P 500 index
Other invested asset portfolio total return
The pre-tax equivalent total return for the bond portfolio was approximately 8.5% and 4.0%, respectively, in 2025 and 2024. The pre-tax equivalent return adjusts the yield on tax-exempt bonds to the fully taxable equivalent.
Invested Assets.
The Company’s cash and invested assets totaled $45.4 billion at December 31, 2025, which consisted of 86.8% fixed maturities, short term investments and cash and 13.2% of other invested assets and equity securities. Of the total fixed maturities, 98.1% were investment grade. Additionally, the average maturity of fixed maturity securities was 4.9 years at December 31, 2025, and their overall average duration was 3.4 years.
As of December 31, 2025, the Company did not have any direct investments in commercial real estate, direct commercial mortgages or securities of issuers that are experiencing cash flow difficulty to an extent that the Company’s management believes that the issuer’s ability to meet debt service payments, except where an allowance for credit losses has been recognized, is threatened.
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The Company’s investment portfolio includes structured commercial mortgage-backed securities (“CMBS”) with a book value of $1.6 billion and a fair value of $1.5 billion. As of December 31, 2025, 64.3% of CMBS securities in our investment portfolio are rated AAA by nationally recognized rating agencies. The remainder of CMBS securities in our investment portfolio are rated investment grade by nationally recognized rating agencies.
The following table represents the credit quality distribution of the Company’s fixed maturities for the periods indicated:
At December 31,
(Dollars in millions)
Fair Value/
Amortized Cost (1)
Percent of
Total
Fair Value/
Amortized Cost (1)
Percent of
Total
Rating Agency Credit Quality Distribution:
AAA
BBB
Rated below B
Other
Total
(Some amounts may not reconcile due to rounding.)
(1) Fixed maturities-available for sale are at fair value and fixed maturities-held to maturity are at amortized cost, net of allowances for credit losses.
The following table summarizes fixed maturities by contractual maturity for the periods indicated:
At December 31,
(Dollars in millions)
Fair Value/
Amortized Cost (1) (2)
Percent of
Total
Fair Value/
Amortized Cost (1) (2)
Percent of
Total
Fixed maturity securities
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Asset-backed securities
Mortgage-backed securities
Total fixed maturity securities
(Some amounts may not reconcile due to rounding.)
(1) Fixed maturities-available for sale are at fair value and fixed maturities-held to maturity are at amortized cost, net of allowances for credit losses.
(2) The amortized cost and fair value of fixed maturity securities are shown by contractual maturity. Mortgage-backed securities are generally more likely to be prepaid than other fixed maturity securities. As the stated maturity of such securities may not be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.
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Net Gains (Losses) on Investments.
The following table presents the composition of our net gains (losses) on investments for the periods indicated:
Years Ended December 31,
(Dollars in millions)
Variance
Variance
Realized gains (losses) from dispositions:
Fixed maturity securities - available for sale
Gains
Losses
Total
Fixed maturity securities - held to maturity
Gains
Losses
Total
Equity securities
Gains
Losses
Total
Other Invested Assets
Gains
Losses
Total
Short Term Investments
Gains
Losses
Total
Total net realized gains (losses) from dispositions
Gains
Losses
Total
Allowance for credit losses
Gains (losses) from fair value adjustments
Equity securities
Total
Total net gains (losses) on investments
(Some amounts may not reconcile due to rounding.)
Total net gains (losses) on invest ments in 2025 primarily consist of $112 million of net losses due to the disposition of investments and an increase to the allowance for credit losses of $30 million.
Segment Results.
Our two reportable segments, Reinsurance and Insurance, each have executive leadership who are responsible for the overall performance of their respective segments and who are directly accountable to our chief operating decision maker (“CODM”), the Chief Executive Officer of Everest Group, Ltd., who is ultimately responsible for reviewing the business to assess performance, make operating decisions and allocate resources. We report the results of our operations consistent with the manner in which our CODM reviews the business.
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During the fourth quarter of 2024, the Company revised its classification and presentation of certain run-off business, previously included within the Reinsurance and Insurance reportable segments, as part of a new segment called "Other". The Other segment includes the results of our sports and leisure business sold in October 2024, consisting of policies written prior to the sale and polices renewed and certain new business written on the Company’s paper post-sale. It also includes run-off A&E exposures, certain discontinued insurance programs primarily written prior to 2012 and certain discontinued insurance and reinsurance coverage classes. The Other segment does not generally sell insurance or reinsurance products but is responsible for the management of existing policies and settlement of related losses. These segment presentation changes have been reflected retrospectively.
The Company does not review and evaluate the financial results of its segments based upon balance sheet data. Management generally monitors and evaluates the financial performance of these segments based upon their underwriting results. Underwriting results include earned premium less losses and LAE incurred, commission and brokerage expenses and other underwriting expenses. The Company measures its underwriting results using ratios, in particular, loss, commission and brokerage and other underwriting expense ratios, which, respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums earned. Management has determined that these measures are appropriate and align with how the business is managed. We continue to evaluate our segments as our business evolves and may further refine our segments and financial performance measures.
The following discusses the underwriting results for each of our segments for the periods indicated.
Reinsurance.
The following table presents the underwriting results and ratios for the Reinsurance segment for the periods indicated:
Years Ended December 31,
(Dollars in millions)
Variance
% Change
Variance
% Change
Gross written premiums
Net written premiums
Premiums earned
Incurred losses and LAE
Commission and brokerage
Other underwriting expenses
Underwriting gain (loss)
Point Chg
Point Chg
Loss ratio
Commission and brokerage ratio
Other underwriting expense ratio
Combined ratio
(NM, not meaningful)
(Some amounts may not reconcile due to rounding.)
Premiums. Gross written premiums decreased by 0.9% to $12.8 billion in 2025 from $12.9 billion in 2024. The decrease in gross written premiums was primarily due to North America casualty pro rata and casualty excess of loss lines of business, partially offset by an increase in the property book of business and financial lines business.
Net written premiums decreased by 1.5% to $11.8 billion in 2025, compared to $12.0 billion in 2024. The current year over prior year decrease was primarily due to changes in cessions and overall mix of business
Premiums earned increased by 2.8% to $11.7 billion in 2025, compared to $11.4 billion in 2024, primarily driven by increased property pro rata business written that was recorded over the prior quarters which are now being earned, partially offset by casualty pro rata lines. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period, whereas written premiums are generally recorded at the initiation of the coverage period.
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Incurred Losses and LAE. The following table presents the incurred losses and LAE for the Reinsurance segment for the periods indicated:
Years Ended December 31,
(Dollars in millions)
Current
Year
Ratio %/
Pt Change
Prior
Years
Ratio %/
Pt Change
Total
Incurred
Ratio %/
Pt Change
Attritional
Catastrophes
Total segment
Attritional
Catastrophes
Total segment
Attritional
Catastrophes
Total segment
Variance 2025/2024
Attritional
pts
pts
pts
Catastrophes
pts
pts
pts
Total segment
pts
pts
pts
Variance 2024/2023
Attritional
pts
pts
pts
Catastrophes
pts
pts
pts
Total segment
pts
pts
pts
(Some amounts may not reconcile due to rounding.)
Incurred losses increased by 5.8% to $7.5 billion in 2025, compared to $7.1 billion in 2024. The increase was primarily due to an increase of $264 million in current year attritional losses, an increase in unfavorable development on prior year attritional reserves of $117 million and a decrease in favorable development on prior year catastrophe losses of $36 million, partially offset by a decrease of $3 million in current year catastrophe losses.
The increase in current year attritional losses was mainly related to the impact of the increase in premiums earned, the impact of the Washington D.C. aviation accident during the first quarter and reserve strengthening on the U.S. casualty business. The unfavorable development on prior year attritional reserves was mainly driven by aviation losses associated with the Russia/Ukraine war and casualty reserves, partially offset by favorable development booked on well-seasoned reserves in the property and mortgage lines.
The current year catastrophe losses of $768 million in 2025 related primarily to the 2025 Southern California wildfires ($502 million), Hurricane Melissa ($143 million), the 2025 Australian Storms ($47 million), Myanmar earthquake ($20 million) and Typhoon Ragasa ($20 million), with the remaining losses resulting from various events. The $772 million of current year catastrophe losses in 2024 related primarily to Hurricane Milton ($275 million), Hurricane Helene ($64 million), Hurricane Debby ($55 million), Hurricane Beryl ($54 million), the 2024 European flood Boris ($50 million), the 2024 Baltimore bridge collapse ($50 million), the third quarter 2024 Calgary Alberta storms ($45 million) and the 2024 Brazil Floods ($41 million), the 2024 Dubai floods ($32 million), the 2024 New Caledonia Riots ($31 million), the 2024 Germany floods ($28 million) and the 2024 Taiwan earthquake ($25 million), with the remaining losses resulting from various events. For 2025, the favorable development on prior year catastrophe losses of $89 million was mainly related to reserves released related to the 2022 Hurricane Ian and older well-seasoned CAT events.
Segment Expenses. Commission and brokerage expense increased by 4.0% to $3.0 billion in 2025, compared to $2.8 billion in 2024. The increase was mainly due to the impact of the increase in premiums earned, contingent commissions and changes in the mix of business. Segment other underwriting expenses increased to $291 million in 2025 from $290 million in 2024. The other underwriting expenses remained relatively flat to prior year due to expense management.
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Insurance.
The following table presents the underwriting results and ratios for the Insurance segment for the periods indicated:
Years Ended December 31,
(Dollars in millions)
Variance
% Change
Variance
% Change
Gross written premiums
Net written premiums
Premiums earned
Incurred losses and LAE
Commission and brokerage
Other underwriting expenses
Underwriting gain (loss)
Point Chg
Point Chg
Loss ratio
Commission and brokerage ratio
Other underwriting expense ratio
Combined ratio
(Some amounts may not reconcile due to rounding.)
Premiums. Gross written premiums decreased by 5.7% to $4.8 billion in 2025, compared to $5.1 billion in 2024. The decrease in insurance premiums was primarily due to portfolio actions taken on specialty casualty lines of business as well as the impact of the sale of renewal rights, partially offset by an increase in other specialty business and accident and health business.
Net written premiums decreased by 1.1% to $3.6 billion in 2025, compared to $3.7 billion in 2024. The decrease in net written is due to the reduction gross written premium partially offset by business mix and higher retentions in certain lines of business.
Premiums earned increased by 3.9% to $3.7 billion in 2025, compared to $3.6 billion in 2024. The change in premiums earned relative to net written premiums was primarily the result of timing as the higher base premium written in 2024 is being earned through the 2025 period; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period.
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Incurred Losses and LAE. The following table presents the incurred losses and LAE for the Insurance segment for the periods indicated:
Years Ended December 31,
(Dollars in millions)
Current
Year
Ratio %/
Pt Change
Prior
Years
Ratio %/
Pt Change
Total
Incurred
Ratio %/
Pt Change
Attritional
Catastrophes
Total segment
Attritional
Catastrophes
Total segment
Attritional
Catastrophes
Total segment
Variance 2025/2024
Attritional
pts
pts
pts
Catastrophes
pts
pts
pts
Total segment
pts
pts
pts
Variance 2024/2023
Attritional
pts
pts
pts
Catastrophes
pts
pts
pts
Total segment
pts
pts
pts
(Some amounts may not reconcile due to rounding.)
Incurred losses and LAE decreased by 15.8% to $3.1 billion in 2025, compared to $3.6 billion in 2024. The decrease was mainly due to a decrease in unfavorable development on prior years attritional losses of $601 million and a decrease in current year catastrophe losses of $79 million, partially offset by an increase of $101 million in current year attritional losses and a decrease in favorable development on prior years catastrophe losses of $9 million.
The increase in current year attritional losses and the 2025 unfavorable development on prior years attritional losses of $471 million were both primarily due to reserve strengthening in U.S. casualty lines of business driven by elevated loss experience in excess casualty and U.S. liability lines primarily on accident years 2022-2024.
The current year catastrophe losses of $41 million primarily related to Hurricane Melissa ($16 million), the first quarter 2025 Myanmar earthquake ($8 million) and the 2025 Southern California wildfires ($7 million), with the remaining losses resulting from various events. The $120 million of current year catastrophe losses in 2024 primarily related to Hurricane Milton ($44 million), Hurricane Helene ($29 million), Hurricane Beryl ($10 million) and the third quarter 2024 Calgary Alberta storms ($9 million), with the remaining losses resulting from various events. For 2025, the favorable development on prior year catastrophe losses of $5 million was related to multiple events from 2024 and prior.
Segment Expenses. Commission and brokerage increased by 11.2% to $488 million in 2025, compared to $439 million in 2024. Segment other underwriting expenses increased to $721 million in 2025, compared to $615 million in 2024. The change in commission and brokerage expenses is driven by mix as the international portfolio increases which carries a higher net commission rate. The increase in other underwriting expenses was mainly due to the impact of strategic actions in insurance operations.
Other.
The Other segment includes the results of our sports and leisure business sold in October 2024, consisting of policies written prior to the sale and polices renewed and certain new business written on the Company’s paper post-sale. It also includes run-off A&E exposures, certain discontinued insurance programs primarily written prior to 2012 and certain
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discontinued insurance and reinsurance coverage classes. The Other segment does not generally sell insurance or reinsurance products but is responsible for the management of existing policies and settlement of related losses.
The following table presents the underwriting results and ratios for the Other segment for the periods indicated:
Years Ended December 31,
(Dollars in millions)
Gross written premiums
Net written premiums
Premiums earned
Incurred losses and LAE
Commission and brokerage
Other underwriting expenses
Underwriting gain (loss)
(Some amounts may not reconcile due to rounding.)
Incurred Losses and LAE. Incurred losses and LAE decreased to $292 million in 2025, compared to $580 million in 2024. The decrease was mainly due to a decrease in unfavorable development on prior years attritional losses of $240 million. During 2025, the unfavorable development on prior year attritional losses for the Company’s Other segment of $163 million was mainly related to unfavorable development on prior year attritional losses driven by U.S. casualty lines, primarily from our sports and leisure business.
Critical Accounting Estimates
The following is a summary of the critical accounting estimates related to accounting estimates that (1) require management to make assumptions about highly uncertain matters and (2) could materially impact the consolidated financial statements if management made different assumptions.
Loss and LAE Reserves. Our most critical accounting estimate is the determination of our loss and LAE reserves. We maintain reserves equal to management’s estimated ultimate liability for losses and LAE for reported and unreported claims for our insurance and reinsurance businesses. Because reserves are based on estimates of ultimate losses and LAE by underwriting or accident year, we use a variety of statistical and actuarial techniques to monitor reserve adequacy over time, evaluate new information as it becomes known and adjust reserves whenever an adjustment appears warranted. We consider many factors when setting reserves including: (1) our exposure base and projected ultimate premiums earned; (2) our expected loss ratios by product and class of business, which are developed collaboratively by underwriters and actuaries; (3) actuarial methodologies and assumptions which analyze our loss reporting and payment experience, size of loss distribution, reports from ceding companies and historical trends, such as reserving patterns, payments and product mix; (4) current legal interpretations of coverage and liability; and (5) economic conditions including but not limited to social inflation. Management’s estimate is developed through with actuarial, underwriting, , legal and finance departments and culminates with the input of reserve committees. Each segment reserve committee includes the participation of the relevant parties from actuarial, finance, and segment senior management. Reserves are further reviewed by Everest’s Chief Reserving Actuary and senior management. The objective of such process is to determine a single estimate viewed by management to be the estimate of its ultimate liability. Our insurance and reinsurance and LAE reserves represent management’s estimate of our ultimate liability. Actual and LAE ultimately paid may , perhaps substantially, from such reserves. Net income () will be impacted in a period in which the change in estimated ultimate and LAE is recorded. See also ITEM 8, “Financial Statements and Supplementary Data” - Note 1 of Notes to the Consolidated Financial Statements.
It is more difficult to accurately estimate loss reserves for reinsurance liabilities than for insurance liabilities. At December 31, 2025, we had reinsurance loss reserves of $22.7 billion, insurance loss reserves of $10.2 billion and other loss reserves of $1.4 billion, of which $209 million were loss reserves for A&E liabilities. A detailed discussion of additional considerations related to A&E exposures follows later in this section.
The detailed data required to evaluate ultimate losses for our insurance business is accumulated from our underwriting and claim systems. Reserving for reinsurance requires evaluation of loss information received from ceding companies. Ceding companies report losses to us in many ways depending on the type of contract and the agreed or contractual reporting requirements. Generally, proportional/quota share contracts require the submission of a monthly/quarterly account, which includes premium and loss activity for the period with corresponding reserves as established by the ceding company. This information is recorded into our records. For certain proportional contracts, we may require a
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detailed loss report for claims that exceed a certain dollar threshold or relate to a particular type of loss. Excess of loss and facultative contracts generally require individual loss reporting with precautionary notices provided when a loss reaches a significant percentage of the attachment point of the contract or when certain causes of loss or types of injury occur. Our experienced Claims staff handles individual loss reports and supporting claim information. Based on our evaluation of a claim, we may establish additional case reserves in addition to the case reserves reported by the ceding company. To ensure ceding companies are submitting required and accurate data, the Underwriting, Claim, Reinsurance Accounting and Internal Audit departments of the Company perform various reviews of our ceding companies, particularly larger ceding companies, including on-site audits.
We sort our reserves by segment into exposure groupings for actuarial analysis. We assign our business to exposure groupings so that the underlying exposures have reasonably homogeneous loss development characteristics and are large enough to facilitate credible estimation of ultimate losses. We periodically review our exposure groupings, and we may change our groupings over time as our business changes. We currently use approximately 250 exposure groupings to develop our reserve estimates. One of the key selection characteristics for the exposure groupings is the historical duration of the claims settlement process. Business in which claims are reported and settled relatively quickly are commonly referred to as short tail lines, principally property lines. Casualty claims tend to take longer to be reported and settled and casualty lines are generally referred to as long tail lines. Our estimates of ultimate losses for shorter tail lines, with the exception of loss estimates for large catastrophic events, generally exhibit less uncertainty than those for the longer tail lines.
We use a variety of actuarial methodologies, such as expected loss ratio, chain ladder reserving methods and Bornhuetter-Ferguson, supplemented by judgment where appropriate, to estimate our ultimate losses and LAE for each exposure group. Although we use similar actuarial methodologies for both short tail and long tail lines, the faster reporting of experience for the short tail lines allows us to have greater confidence in our estimates of ultimate losses at an earlier stage than for long tail lines. For immature underwriting or accident years, the initial expected loss ratios are key inputs that involve management judgment and are based on a variety of factors, including: (1) expected loss ratios developed during our pricing process; (2) historical loss ratios adjusted for rate change and trend; and (3) industry benchmarks for similar business. These judgments take into account our view of past, current and future factors that may influence ultimate losses, including: (1) market conditions; (2) changes in the business underwritten; (3) changes in timing of the emergence of ; and (4) other factors. The determination of when reported are sufficient and credible to warrant selection of an ultimate ratio different from the initial expected ratio also requires judgment.
Our carried reserves at each reporting date are management’s best estimate of ultimate unpaid losses and LAE at that date. We complete detailed reserve studies for each exposure group annually for our reinsurance and insurance operations. The completed annual reserve studies are “rolled forward” for each accounting period until the subsequent reserve study is completed. Analyzing the roll-forward process involves comparing actual reported losses to expected losses based on the most recent reserve study. The Company analyzes significant variances between actual and expected losses and also considers recent market, underwriting and management criteria to determine management’s best estimate of ultimate unpaid losses and LAE.
Certain reserves, including losses from widespread catastrophic events, cannot be estimated using traditional actuarial method. Rather, loss and LAE reserves are estimated by completing an in-depth analysis of the individual contracts which may potentially be impacted by the loss. The analysis uses inputs from various sources and methodology, to build up a comprehensive perspective. Such analysis generally involves: 1) estimating the size of insured industry losses; 2) reviewing portfolios to identify contracts which are exposed; 3) reviewing information reported or otherwise provided by customers and brokers; 4) discussing the loss with customers and brokers; and 5) estimating the ultimate expected cost to settle all claims and administrative costs arising from the loss on a contract-by-contract basis and in aggregate for the event. Due to the inherent uniqueness or specific nature of a catastrophic event, each event has its own unique assessment, and different weights may be applied to various inputs based on our judgment. Once a has occurred, during the then current reporting period, we record our estimate of the ultimate expected cost to settle all arising from the . Our estimate of and LAE reserves is then determined by deducting cumulative paid from its estimate of the ultimate expected . Our estimate of incurred but not reported (“IBNR”) is determined by deducting cumulative paid , case reserves and additional case reserves from its estimate of the ultimate expected .
Because catastrophe losses are typically due to prominent, public events such as hurricanes and earthquakes, we are often able to use independent reports as part of our loss reserve estimation process. We also review catastrophe bulletins published by various statistical modeling agencies to assist in determining the size of the industry loss, although these reports may not be available for some time after an event. For smaller events including localized severe weather events such as windstorms, hail, ice, snow, flooding, freezing and tornadoes, which are not necessarily prominent, public
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occurrences, we initially place greater reliance on catastrophe bulletins published by statistical modeling agencies to assist in determining what events occurred during the reporting period than we do for large events. This includes reviewing catastrophe bulletins published by Property Claim Services for U.S. catastrophes. We set our initial estimates of reserves for loss and LAE for these smaller events based on a combination of its historical market share for these types of losses and the estimate of the total insured industry property losses as reported by statistical modeling agencies, although we may make significant adjustments based on our current exposure to the geographic region involved as well as the size of the loss and the peril involved.
In general, reserves for more recent large losses are subject to greater uncertainty and, therefore, greater potential variability, and are likely to experience material changes from one period to the next. This is due to the uncertainty as to the size of the industry losses, uncertainty as to which contracts have been exposed, uncertainty due to complex legal and coverage issues that can arise out of large or complex losses, and uncertainty as to the magnitude of claims incurred by our customers. As our losses age, more information becomes available, and we believe our estimates become more certain.
Given the inherent variability in our loss reserves, we have developed an estimated range of possible gross reserve levels. A table of ranges by segment, accompanied by commentary on potential and historical variability, is included in “Financial Condition - Loss and LAE Reserves”. The ranges are developed using the exposure groups used in the published global loss triangles. For each exposure group, our actuaries calculate a range of possible ultimate losses for each accident year. These ranges are calculated by applying a variety of different acceptable actuarial methods, and varying the parameter selections within a reasonable set of possibilities. Our estimates of our reserve variability may not be comparable to those of other companies because there are no consistently applied actuarial or accounting standards governing such presentations. Our recorded reserves reflect our best point estimate of our liabilities, and our actuarial methodologies focus on developing such point estimates. We calculate the ranges subsequently, based on the historical variability of such reserves.
A&E Exposures. We continue to receive claims under expired insurance and reinsurance contracts asserting injuries and/or damages relating to or resulting from environmental pollution and hazardous substances, including asbestos. Environmental claims typically assert liability for (a) the mitigation or remediation of environmental contamination or (b) bodily injury or property damage caused by the release of hazardous substances into the land, air or water. Asbestos claims typically assert liability for bodily injury from exposure to asbestos or for property damage resulting from asbestos or products containing asbestos. The results of run-off A&E exposures are included within the Company’s Other segment.
Our reserves include an estimate of our ultimate liability for A&E claims. There are significant uncertainties surrounding our estimates of our potential losses from A&E claims. Among the uncertainties are: (a) potentially long waiting periods between exposure and manifestation of any bodily injury or property damage; (b) difficulty in identifying sources of asbestos or environmental contamination; (c) difficulty in properly allocating responsibility and/or liability for asbestos or environmental damage; (d) changes in underlying laws and judicial interpretation of those laws; (e) the potential for an asbestos or environmental claim to involve many insurance providers over many policy periods; (f) questions concerning interpretation and application of insurance and reinsurance coverage; and (g) uncertainty regarding the number and identity of insureds with potential asbestos or environmental exposure.
Due to the uncertainties discussed above, the ultimate losses attributable to A&E, and particularly asbestos, may be subject to more variability than are non-A&E reserves and such variation could have a material adverse effect on our financial condition, results of operations and/or cash flows. See also ITEM 8, “Financial Statements and Supplementary Data” - Notes 1 and 4 of Notes to the Consolidated Financial Statements.
Reinsurance Recoverables. We have purchased reinsurance to reduce our exposure to adverse claim experience, large claims and catastrophic loss occurrences. Our ceded reinsurance provides for recovery from reinsurers of a portion of losses and loss expenses under certain circumstances. Such reinsurance does not relieve us of our obligation to our policyholders. In the event our reinsurers are unable to meet their obligations under these agreements or are able to successfully challenge losses ceded by us under the contracts, we will not be able to realize the full value of the reinsurance recoverable balance. In some cases, we may hold full or partial collateral for the receivable, including letters of credit, trust assets and cash. Additionally, creditworthy foreign reinsurers of business written in the U.S., as well as capital markets’ reinsurance mechanisms, are generally required to secure their obligations.
We have established reserves for uncollectible balances based on our assessment of the collectability of the outstanding balances. The allowance for uncollectible reinsurance reflects management’s best estimate of reinsurance cessions that may be uncollectible in the future due to reinsurers’ unwillingness or inability to pay. The allowance for uncollectible
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reinsurance recoverable includes an allowance for disputed balances. Based on this analysis, the Company may adjust the allowance for uncollectible reinsurance or charge off reinsurer balances that are determined to be uncollectible. Reinsurance recoverable balances are considered past due when amounts that have been billed are not collected within contractually stipulated time periods.
Due to the inherent uncertainties as to collection and the length of time before reinsurance recoverable become due, it is possible that future adjustments to the Company’s reinsurance recoverable, net of the allowance, could be required, which could have a material adverse effect on the Company’s consolidated results of operations or cash flows in a particular quarter or annual period.
The allowance is estimated as the amount of reinsurance recoverable exposed to loss multiplied by estimated factors for the probability of default. The reinsurance recoverable exposed is the amount of reinsurance recoverable net of collateral and other offsets, considering the nature of the collateral, potential future changes in collateral values, and historical loss information for the type of collateral obtained. The probability of default factors are historical insurer and reinsurer defaults for liabilities with similar durations to the reinsured liabilities as estimated through multiple economic cycles. Credit ratings are forward-looking and consider a variety of economic outcomes. The Company's evaluation of the required allowance for reinsurance recoverable considers the current economic environment as well as macroeconomic scenarios. To manage reinsurer credit risk, a reinsurance security review committee evaluates the credit standing, financial performance, management and operational quality of each potential reinsurer.
The Company records credit loss expenses related to reinsurance recoverable in incurred losses and LAE in the Company’s consolidated statements of operations and comprehensive income (loss). Write-offs of reinsurance recoverable and any related allowance are recorded in the period in which the balance is deemed uncollectible.
Retroactive Reinsurance.
Retroactive reinsurance agreements are reinsurance agreements under which a reinsurer agrees to reimburse the Company as a result of loss development related to past insurable events. For these agreements, the excess of the amounts ultimately collectible under the agreement over the consideration paid is recognized as a deferred gain liability and amortized into income over the settlement period of the ceded reserves. The amount of deferred gain liability is recalculated each period based on cumulative recoveries not yet collected relative to the latest estimate of ultimate losses to be recovered. If the consideration paid exceeds the ultimate losses collectible under the agreement, the net loss on the agreement is recognized in income immediately in incurred losses and loss adjustment expenses in the Company’s consolidated statement of operations. In any given period, the change in deferred gain included in net income includes amortization of the deferred gain based on the percentage of ultimate ceded collected plus any change in the deferred liability due to change in the estimated to be recovered. The amounts are recalculated each period based on payments and updated reserves estimates.
Premiums Written and Earned. Premiums written by us are earned ratably over the coverage periods of the related insurance and reinsurance contracts. We establish unearned premium reserves to cover the unexpired portion of each contract. Such reserves, for assumed reinsurance, are computed using pro rata methods based on statistical data received from ceding companies. Premiums earned, and the related costs, which have not yet been reported to us, are estimated and accrued. Premiums written are based on contract and policy terms and include estimates based on information received from both insureds and ceding companies. Differences between such estimates and actual amounts are recorded in the period in which the estimates are changed, or the actual amounts are determined. These earned but not reported premiums are combined with reported earned premiums to comprise our total premiums earned for determination of our incurred losses and loss and LAE reserves. Commission expense and incurred losses related to the change in earned but not reported premium are included in current period company and segment financial results. See also ITEM 8, “Financial Statements and Supplementary Data” - Note 1 of Notes to the Consolidated Financial Statements.
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The following table displays the estimated components of net earned but not reported premiums by segment for the periods indicated:
At December 31,
(Dollars in millions)
Reinsurance
Insurance
Other
Total
(Some amounts may not reconcile due to rounding.)
Investment Valuation. Our fixed income securities are classified for accounting purposes as either available for sale or held to maturity. The available for sale fixed maturity securities are carried at fair value and the held to maturity fixed maturity portfolio is carried at amortized cost, net of current expected credit allowance on our consolidated balance sheets. Our equity securities are all carried at fair value. Some of our CMBS are valued using cash flow models and risk-adjusted discount rates. We hold privately placed securities which are either valued by investment advisors or the Company. In some instances, values provided by an investment advisor are supported with opinions from qualified independent third parties. The Company has procedures in place to review the values received from its investment advisors. At December 31, 2025 and 2024, our investment portfolio included a total of $5.5 billion and $5.1 billion of limited partnership investments, whose values are reported pursuant to the equity method of accounting, and corporate-owned life insurance (“COLI”) policies, whose values are reported at cash surrender value. We carry the limited partnership investments at values provided by the managements of the limited partnerships and due to inherent reporting lags, the carrying values are based on values with “as of” dates from generally one month to one quarter prior to our financial statement date.
At December 31, 2025, we had net unrealized gains on our fixed maturity securities, net of tax, of $5 million, compared to net unrealized losses on our fixed maturity securities, net of tax, of $849 million at December 31, 2024. Gains (losses) from fair value fluctuations on available for sale fixed maturity securities are reflected as accumulated other comprehensive income (loss) in the consolidated balance sheets. Fair value declines for the available for sale fixed income portfolio, which are considered credit related, are reflected in our consolidated statements of operations and comprehensive income (loss), as realized losses on investments. We consider many factors when determining whether a fair value decline is credit related, including: (1) we have no intent to sell and, more likely than not, will not be required to sell prior to recovery, (2) the credit strength of the issuer, (3) the issuer’s market sector, (4) the length of time to maturity and (5) for asset-backed securities, changes in prepayments, credit and underlying rates. If management’s assessments change in the future, we may ultimately record a realized after management originally concluded that the in value was not attributed to credit related factors.
Fixed maturity securities designated as held to maturity consist of debt securities for which the Company has both the positive intent and ability to hold to maturity or redemption and are reported at amortized cost, net of the current expected credit loss allowance. Interest income for fixed maturity securities held to maturity is determined in the same manner as interest income for fixed maturity securities available for sale. The Company evaluates fixed maturity securities classified as held to maturity for current expected credit losses utilizing risk characteristics of each security, including credit rating, remaining time to maturity, adjusted for prepayment considerations, and subordination level, and applying default and recovery rates, which include the incorporation of historical credit loss experience and macroeconomic forecasts, to develop an estimate of current expected credit losses.
Tax. On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (the “2023 Act”), which will apply a 15% corporate income tax to certain Bermuda businesses in fiscal years beginning on or after January 1, 2025. The 2023 Act includes a provision referred to as “The Economic Transition Adjustment” (the “ETA”), which is intended to provide a fair and equitable transition into the new tax regime, and results in a deferred tax benefit for the Company. However, on January 15, 2025, the OECD issued guidance related to “deferred tax assets arising from tax benefits provided by General Government” restricting the utilization of those deferred tax benefits against the computation of its Pillar Two Global Minimum Taxes to approximately 20% of the originally calculated amounts and only for a grace period of two years through 2026. If the Bermuda Ministry of Finance amends the 2023 Act in response to this guidance, the exact impact of any such amendments is uncertain but there is a risk that it results in a reduction in the Company's Deferred Tax Assets.
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The net deferred tax assets principally relate to the identifiable intangible assets. We estimated the fair value of the identifiable intangible assets using discounted future cash flow models. The significant assumptions utilized in the discounted future cash flow models include the forecasted revenues and expected profits to be generated by the identifiable intangible assets and discount rates.
See also ITEM 8, “Financial Statements and Supplementary Data” - Note 1 of Notes to the Consolidated Financial Statements.
FINANCIAL CONDITION
Investments. Total investments were $44.1 billion at December 31, 2025, an increase of $4.1 billion compared to $40.0 billion at December 31, 2024. The rise in investments was primarily related to an increase in fixed maturities - available for sale due to an overall net purchase of $4.3 billion of fixed maturities - available for sale in 2025.
The Company’s limited partnership investments are comprised of limited partnerships that invest in private equity, private credit and private real estate. Generally, the limited partnerships are reported on a month or quarter lag. We receive annual audited financial statements for all of the limited partnerships which are primarily prepared using fair value accounting in accordance with GAAP guidance. For the quarterly reports, the Company reviews the financial reports for any unusual changes in carrying value. If the Company becomes aware of a significant decline in value during the lag reporting period, the loss will be recorded in the period in which the Company identifies the decline.
The table below summarizes the composition and characteristics of our investment portfolio as of the dates indicated:
At December 31,
Fixed income portfolio duration (years)
Fixed income composite credit quality
Reinsurance Recoverables. Reinsurance recoverables for both paid and unpaid losses totaled $5.1 billion at December 31, 2025 and $3.1 billion at December 31, 2024. At December 31, 2025, in connection with the ADC reinsurance agreements, $1,253 million was recoverable from State National Insurance Company, Inc. Additionally at December 31, 2025, $411 million, or 8.1%, was recoverable from Mt. Logan Re, Ltd. (“Mt. Logan Re”) collateralized segregated accounts and $289 million, or 5.7%, was recoverable from Munich Reinsurance America, Inc. No other retrocessionaire accounted for more than 5% of our recoverables.
Loss and LAE Reserves. Gross loss and LAE reserves totaled $34.3 billion and $29.9 billion at December 31, 2025 and 2024, respectively.
The following tables summarize gross outstanding loss and LAE reserves by segment, classified by case reserves and IBNR reserves, for the periods indicated:
At December 31, 2025
(Dollars in millions)
Case
Reserves
IBNR
Reserves
Total
Reserves
Total
Reinsurance
Insurance
Other (1)
Total
(Some amounts may not reconcile due to rounding.)
(1) Reserves for A&E exposures are included within Other. At December 31, 2025, A&E Case and IBNR reserves totaled $150 million and $59 million, respectively.
At December 31, 2024
(Dollars in millions)
Case
Reserves
IBNR
Reserves
Total
Reserves
Total
Reinsurance
Insurance
Other (1)
Total
(Some amounts may not reconcile due to rounding.)
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(1) Reserves for A&E exposures are included within Other. At December 31, 2024, A&E Case and IBNR reserves totaled $149 million and $111 million, respectively.
Changes in premiums earned and business mix, reserve refinement, catastrophe losses and changes in catastrophe loss reserves and claim settlement activity all impact loss and LAE reserves by segment and in total.
Our carried loss and LAE reserves represent management’s best estimate of our ultimate liability for unpaid claims. We continuously re-evaluate our reserves, including re-estimates of prior period reserves, taking into consideration all available information and, in particular, newly reported loss and claim experience. Changes in reserves resulting from such re-evaluations are reflected in incurred losses in the period when the re-evaluation is made. Our analytical methods and processes operate at multiple levels including individual contracts, groupings of like contracts, classes and lines of business, internal business units, segments, accident years, legal entities and in the aggregate. In order to set appropriate reserves, we make qualitative and quantitative analyses and judgments at these various levels. We utilize actuarial science, business expertise and management judgment in a manner intended to ensure the accuracy and consistency of our reserving practices. Management’s best estimate is developed through collaboration with actuarial, underwriting, claims, legal and finance departments and culminates with the input of reserve committees. Each segment reserve committee includes the participation of the relevant parties from actuarial, finance, and segment senior management. Reserves are further reviewed by Everest’s Chief Reserving Actuary and senior management. The objective of such process is to determine a single estimate viewed by management to be the estimate of its ultimate liability. Nevertheless, our reserves are estimates, which are subject to variation, which may be significant.
There can be no assurance that reserves for, and losses from, claim obligations will not increase in the future, possibly by a material amount. However, we believe that our existing reserves and reserving methodologies lessen the probability that any such increase would have a material adverse effect on our financial condition, results of operations or cash flows.
We have included ranges for loss reserve estimates determined by our actuaries, which have been developed through a combination of objective and subjective criteria. Our presentation of this information may not be directly comparable to similar presentations of other companies as there are no consistently applied actuarial or accounting standards governing such presentations. Our recorded reserves are an aggregation of our best point estimates for approximately 250 reserve groups and reflect our best point estimate of our liabilities. Our actuarial methodologies develop point estimates rather than ranges and the ranges are developed subsequently based upon historical and prospective variability measures.
The following table below represents the reserve levels and ranges for each of our business segments for the period indicated:
Outstanding Reserves and Ranges By Segment (1)
At December 31, 2025
(Dollars in millions)
Reported
Low
Range %
Low
Range
High
Range %
High
Range
Gross Reserves By Segment
Reinsurance
Insurance
Other (excluding A&E)
Total Gross Reserves (excluding A&E)
A&E (Other Segment)
Total Gross Reserves
(Some amounts may not reconcile due to rounding.)
(1) There can be no assurance that reserves will not ultimately exceed the indicated ranges requiring additional income (loss) statement expense.
The size of the range is dependent upon the level of confidence associated with the reserve estimates. Within each range, management’s best estimate of loss reserves is based upon the point estimate derived by our actuaries in detailed reserve studies. Such ranges are necessarily subjective due to the lack of generally accepted actuarial standards with respect to their development. There can be no assurance that our claim obligations will not vary outside of these ranges.
Additional losses, including those relating to latent injuries, and other exposures, which are as yet unrecognized, the type or magnitude of which cannot be foreseen by us or the reinsurance and insurance industry generally, may emerge in the future. Such future emergence, to the extent not covered by existing retrocessional contracts, could have material adverse effects on our future financial condition, results of operations and cash flows.
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A&E Exposures. A&E exposures represent a separate exposure group for monitoring and evaluating reserve adequacy. The results of run-off A&E exposures are included within the Company’s Other segment.
With respect to asbestos only, at December 31, 2025, we had net asbestos loss reserves of $170 million, or 87.9%, of total net A&E reserves, all of which was for assumed business. At December 31, 2025, we had gross asbestos loss reserves of $186 million, or 88.8% of total gross A&E reserves, all of which was for assumed business. See Note 4 of the Notes to the Consolidated Financial Statements for a summary of A&E Exposures.
Ultimate loss projections for A&E liabilities cannot be accomplished using standard actuarial techniques. We believe that our A&E reserves represent management’s best estimate of the ultimate liability; however, there can be no assurance that ultimate loss payments will not exceed such reserves, perhaps by a significant amount.
Industry analysts use the “survival ratio” to compare the A&E reserves among companies with such liabilities. The survival ratio is typically calculated by dividing a company’s current net reserves by the three-year average of annual paid losses. Hence, the survival ratio equals the number of years that it would take to exhaust the current reserves if future loss payments were to continue at historical levels. Using this measurement, our net three-year asbestos survival ratio was 4.7 years at December 31, 2025. These metrics can be skewed by individual large settlements occurring in the prior three years and therefore, may not be indicative of the timing of future payments.
LIQUIDITY AND CAPITAL RESOURCES
Capital. Shareholders’ equity at December 31, 2025 and December 31, 2024 was $15.5 billion and $13.9 billion, respectively. Management’s objective in managing capital is to ensure that the Company’s overall capital level, as well as the capital levels of its operating subsidiaries, exceed the amounts required by regulators, the amount needed to support our current financial strength ratings from rating agencies and our own economic capital models. The Company’s capital has historically exceeded these benchmark levels.
Our two main operating companies, Bermuda Re and Everest Re, are regulated by the Bermuda Monetary Authority (the “BMA”) and the State of Delaware’s Department of Insurance, respectively. Both regulatory bodies have their own capital adequacy models based on statutory capital as opposed to GAAP basis equity. Bermuda Re is subject to the Bermuda Solvency Capital Requirement (“BSCR”) administered by the BMA and Everest Re is subject to the RBC developed by the U.S. National Association of Insurance Commissioners (“NAIC”). Failure to meet the required statutory capital levels could result in various regulatory restrictions, including restrictions on business activity and the payment of dividends to their parent companies.
The regulatory targeted capital and the actual statutory capital for Bermuda Re and Everest Re were as follows:
Bermuda Re (1)
At December 31,
Everest Re (2)
At December 31,
(Dollars in millions)
Regulatory targeted capital
Actual capital
(1) Regulatory targeted capital represents the target capital level from the applicable year's BSCR calculation.
(2) Regulatory targeted capital represents 200% of the RBC authorized control level calculation for the applicable year.
(3) The 2025 BSCR calculation is not yet due to be completed; however, the Company anticipates that Bermuda Re's December 31, 2025 actual capital will exceed the targeted capital level. In accordance with guidance issued by the BMA in 2025, Bermuda Re has reflected the impacts of the ETA recognized in response to the 2023 Act in its 2024 regulatory targeted capital and actual capital.
Our financial strength ratings, as determined by A.M. Best Company (“A.M. Best”), Moody’s and S&P, are important, as they provide our customers and investors with an independent assessment of our financial strength using a rating scale that provides for relative comparisons. We continue to possess significant financial flexibility and access to debt and equity markets as a result of our financial strength, as evidenced by the financial strength ratings assigned by independent rating agencies. See also ITEM 1, “Financial Strength Ratings”.
We maintain our own economic capital models to monitor and project our overall capital, as well as the capital at our operating subsidiaries. A key input to the economic models is projected income, and this input is continually compared to actual results, which may require a change in the capital strategy.
In 2025, we repurchased 2,394,763 of our common shares at a cost of $797 million in the open market and paid $335 million in common share dividends to adjust our capital position and enhance long-term expected returns to our shareholders. During 2024, we repurchased 536,469 of our common shares at a cost of $200 million in the open market
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and paid $334 million in dividends. We may at times enter into a Rule 10b5-1 repurchase plan agreement to facilitate the repurchase of shares. On November 7, 2024, our existing Board authorization to purchase up to 32 million of our shares was increased by 10 million shares to authorize the purchase of up to 42 million shares. As of December 31, 2025, we had repurchased 33.7 million shares under this authorization. During the fourth quarter of 2025, the Company’s Board of Directors declared a quarterly common stock dividend of $2.00 per share. The common stock dividend was paid on December 12, 2025 for holders of record as of November 26, 2025.
On May 19, 2023, the Company completed the public offering of 4,140,000 common shares, which included full exercise of the underwriters’ option to purchase an additional 540,000 common shares, at a public offering price of $360.00 per share. Total net proceeds from the public offering were $1,445 million, after underwriting discount and expenses. The Company’s intent was to use the net proceeds from this offering for long-term reinsurance opportunity and continued build out of the global insurance business.
Liquidity. Our liquidity requirements are generally met from positive cash flow from operations. Positive cash flow results from reinsurance and insurance premiums being collected prior to disbursements for claims, with disbursements generally taking place over an extended period after the collection of premiums, sometimes a period of many years. Collected premiums are generally invested, prior to their use in such disbursements, and investment income provides additional funding for loss payments. Our net cash flows from operating activities were $3.1 billion and $5.0 billion for the years ended December 31, 2025 and 2024, respectively. Additionally, these cash flows reflected net catastrophe loss payments of $852 million and $693 million for the years ended December 31, 2025 and 2024, respectively, and net tax payments of $150 million and $397 million for the years ended December 31, 2025 and 2024, respectively.
If disbursements for losses and LAE, policy acquisition costs and other operating expenses were to exceed premium inflows, cash flow from reinsurance and insurance operations would be negative. The effect on cash flow from operations would be partially offset by cash flow from investment income. Additionally, cash inflows from investment maturities of both short-term investments and longer-term maturities are available to supplement other operating cash flows. We do not expect to supplement negative operations cash flows with investment dispositions.
As the timing of payments for losses and LAE cannot be predicted with certainty, we maintain portfolios of long-term invested assets with varying maturities, along with short-term investments that provide additional liquidity for payment of claims. At December 31, 2025 and December 31, 2024, we held cash and short-term investments of $4.3 billion and $6.3 billion, respectively. Our short-term investments are generally readily marketable and can be converted to cash. In addition to these cash and short-term investments, we had $1.4 billion of fixed maturity securities - available for sale maturing within one year or less, $10.8 billion maturing within one to five years and $8.6 billion maturing after five years at December 31, 2025. We believe that these fixed maturity securities, in conjunction with the short-term investments and positive cash flow from operations, provide ample sources of liquidity for the expected payment of losses and LAE in the near future. We do not anticipate selling a significant amount of securities to pay losses and LAE. At December 31, 2025, we had $21 million of net pre-tax unrealized appreciation related to fixed maturity - available for sale securities, comprised of $619 million of pre-tax unrealized depreciation and $640 million of pre-tax unrealized appreciation.
Management generally expects annual positive cash flow from operations. However, given catastrophic events observed in recent periods, cash flow from operations may decline and could become negative in the near term as significant claim payments are made related to the catastrophes. However, as indicated above, the Company has access to ample liquidity to settle its catastrophe claims and also may receive payments under the catastrophe bond program and the Mt. Logan Re collateralized reinsurance arrangement.
In addition to our cash flows from operations and liquid investments, Everest Re is a member of the FHLBNY, which allows Everest Re to borrow up to 10% of its statutory admitted assets. As of December 31, 2025, Everest Re had statutory admitted assets of approximately $32.6 billion which provides borrowing capacity of up to approximately $3.3 billion. As of December 31, 2025, Everest Re had $1.0 billion of borrowings outstanding, which begin to expire in 2026. See Note 8 - Credit Facilities to the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for further details.
Exposure to Prior Year Development. We are required to maintain reserves to cover our ultimate liability of losses and LAE for both reported and unreported claims. These reserves are only estimates of what we believe the ultimate settlement and administration of claims will cost based on facts and circumstances known to us and actuarial and statistical analysis. Loss reserve estimates are reconsidered, as necessary, as experience develops and to reflect other changes in circumstances that may affect our estimate of ultimate loss, and this could potentially result in increases to our reserves. For the insurance and reinsurance businesses, ultimate losses may differ materially from our expectations
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at the time we underwrite the business. Because of the uncertainties that surround our estimates of loss and LAE reserves, we cannot be certain that ultimate losses and LAE payments will not exceed the estimates we make at any given time. Loss experience in our lines of business is very unpredictable and has been exacerbated by social inflation factors such as uncertain legal system outcomes, increased frequency of high-severity claims and third-party litigation funding. If our reserves are deficient in future periods, we may be required to increase loss reserves in the period in which such deficiencies are identified which would cause a charge to our earnings, a reduction of capital and could result in adverse effects on our business, financial condition, results of operation or liquidity. We have entered into certain development reinsurance agreements to reinsure potential development for years 2024 and prior arising out of North American insurance liabilities within our Insurance and Other segments subject to exclusions for certain liabilities, including among others those related to Asbestos & Environmental reserves.
Exposure to Catastrophes. Like other insurance and reinsurance companies, we are exposed to multiple insured losses arising out of a single occurrence, whether a natural event, such as a hurricane or an earthquake, or other catastrophe, such as an explosion at a major factory. A large catastrophic event can be expected to generate insured losses to multiple reinsurance treaties, facultative certificates and direct insurance policies across various lines of business.
We focus on potential losses that could result from any single event, or series of events as part of our evaluation and monitoring of our aggregate exposures to catastrophic events. Accordingly, we employ various techniques to estimate the amount of loss we could sustain from any single catastrophic event or series of events in various geographic areas. These techniques range from deterministic approaches, such as tracking aggregate limits exposed in catastrophe-prone zones and applying reasonable damage factors, to modeled approaches that attempt to scientifically measure catastrophe loss exposure using sophisticated Monte Carlo simulation techniques that forecast frequency and severity of potential losses on a probabilistic basis.
No single computer model or group of models is currently capable of projecting the amount and probability of loss in all global geographic regions in which we conduct business. In addition, the form, quality and granularity of underwriting exposure data furnished by (re)insureds is not uniformly compatible with the data requirements for our licensed models, which adds to the inherent imprecision in the potential loss projections. Further, the results from multiple models and analytical methods must be combined to estimate potential losses by and across business units. Also, while most models have been updated to incorporate claims information from recent catastrophic events, catastrophe model projections are still inherently imprecise. In addition, uncertainties with respect to future climatic patterns and cycles could add further uncertainty to loss projections from models based on historical data.
Nevertheless, when combined with traditional risk management techniques and sound underwriting judgment, catastrophe models are a useful tool for underwriters to price catastrophe exposed risks and for providing management with quantitative analyses with which to monitor and manage catastrophic risk exposures by zone and across zones for individual and multiple events.
Projected catastrophe losses are generally summarized in terms of the probable maximum loss (“PML”). We define PML as our anticipated loss, taking into account contract terms and limits, caused by a single catastrophe affecting a broad contiguous geographic area, such as that caused by a hurricane or earthquake. The PML will vary depending upon the modeled simulated losses and the make-up of the in-force book of business. The projected severity levels are described in terms of “return periods”, such as “100-year events” and “250-year events”. For example, a 100-year PML is the estimated loss to the current in-force portfolio from a single event which has a 1% probability of being exceeded in a twelve-month period. In other words, it corresponds to a 99% probability that the loss from a single event will fall below the indicated PML. It is important to note that PMLs are estimates. Modeled events are hypothetical events produced by a stochastic model. As a result, there can be no assurance that any actual event will align with the modeled event or that actual from events similar to the modeled events will not vary materially from the modeled event PML.
From an enterprise risk management perspective, the Board of Directors of the Company and each of the Company’s operating subsidiaries, in connection with management, sets limits on the levels of catastrophe loss exposure we may underwrite. The limits are revised periodically based on a variety of factors, including but not limited to our financial resources and expected earnings and risk/reward analyses of the business being underwritten.
Economic loss is the PML exposure, net of third-party reinsurance including catastrophe industry loss warranty cover, reduced by estimated reinstatement premiums to renew coverage and estimated income taxes. The impact of income taxes on the PML depends on the distribution of the losses by corporate entity, which is also affected by inter-affiliate reinsurance. Management also monitors and controls its largest PMLs at multiple points along the loss distribution curve, such as loss amounts at the 20, 50, 100, 250 and 500-year return periods. This process enables management to identify
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and control exposure accumulations and to integrate such exposures into enterprise risk, underwriting and capital management decisions.
Our catastrophe loss projections, segmented by risk zones, are updated quarterly and reviewed as part of a formal risk management review process. Each segment and business unit manages its underwriting risk in accordance with established guidelines. These guidelines place dollar limits on the amount of business that can be written based on a variety of factors, including (re)insured company profile, line of business, geographic location and risk hazards. In each case, the guidelines permit limited exceptions, which must be authorized by the Company’s senior management. Management regularly reviews and revises these guidelines in response to changes in business unit product offerings, market conditions, risk versus reward analyses and our enterprise and underwriting risk management processes.
Our operating results and financial condition can be adversely affected by catastrophe and other large losses. We manage our exposure to catastrophes and other large losses by:
• selective underwriting practices;
• diversifying our risk portfolio by geographic area and by types and classes of business;
• limiting our aggregate catastrophe loss exposure in any particular geographic zone and contiguous zones;
• purchasing reinsurance and/or retrocessional protection to the extent that such coverage can be secured cost-effectively.
We believe that our methods of monitoring, analyzing and managing catastrophe exposures provide a credible risk management framework, which is integrated with our enterprise risk management, underwriting and capital management plans. However, there is much uncertainty and imprecision inherent in the catastrophe models and the catastrophe loss estimation process generally. As a result, there can be no assurance that we will not experience losses from individual events that exceed the PML or other return period projections, perhaps by a material amount. Nor can there be assurance that we will not experience events impacting multiple zones, or multiple severe events that could, in the aggregate, exceed our PML expectations by a significant amount.
The table below reflects our PML exposure, net of third-party reinsurance including catastrophe industry loss warranty cover, at various return periods for our top zones/perils (as ranked by the largest 1 in 100-year economic loss) based on loss projection data as of January 1, 2026:
Return Periods (in years)
Exceeding Probability
(Dollars in millions)
Zone
Peril
Southeast U.S.
Wind
California
Earthquake
Texas
Wind
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The projected net economic losses, defined as PML exposures, net of third-party reinsurance including catastrophe industry loss warranty cover, reinstatement premiums and estimated income taxes, for the top zones/perils scheduled above are as follows:
Return Periods (in years)
Exceeding Probability
(Dollars in millions)
Zone
Peril
Southeast U.S.
Wind
California
Earthquake
Texas
Wind
We believe that our greatest worldwide 1 in 100-year exposure to a single catastrophic event is to a wind event affecting the Southeast U.S., where we estimate we have a PML exposure, net of third party reinsurance including catastrophe industry loss warranty cover, of $2.4 billion which represents approximately 11.0% of our December 31, 2025 shareholders’ equity.
If such a single catastrophe loss were to occur, management estimates that the net economic loss to us would be approximately $1.7 billion. The estimate involves multiple variables, including which Everest entity would experience the loss, and as a result there can be no assurance that this amount would not be exceeded.
We may purchase reinsurance to cover specific business written or the potential accumulation or aggregation of exposures across some or all of our operations. Reinsurance purchasing decisions consider both the potential coverage and market conditions including the pricing, terms, conditions, availability and collectability of coverage, with the aim of securing cost-effective protection from financially secure counterparts. The amount of reinsurance purchased has varied over time, reflecting our view of our exposures and the cost of reinsurance. In recent years, we have increased our use of reinsurance offered through capital market facilities.
We participate in “common account” retrocessional arrangements for certain reinsurance treaties whereby a ceding company purchases reinsurance for the benefit of itself and its reinsurers under one or more of its reinsurance treaties. Common account retrocessional arrangements reduce the effect of individual or aggregate losses to all participating companies, including the ceding company, with respect to the involved treaties.
Information Technology. Everest’s information technology is a key component of its business operations. Information technology systems and services are hosted at public and private cloud service providers across multiple data centers with processing performed at the office locations of our operating subsidiaries and branches. We have implemented security procedures, and regularly assess and enhance our security protocols, to ensure that our key business systems are protected, secured and backed up at off-site locations so that they can be restored promptly if necessary. We have business continuity plans and disaster recovery plans along with periodic testing of those plans to ensure we are capable of providing uninterrupted technology services in the event of major systems outages with alternative secure data centers available in case of broader outages.
Our business operations depend on the proper functioning and availability of our information technology platform, which includes data processing and related electronic communications. We communicate electronically internally and externally with our brokers, program managers, clients, third-party vendors, regulators and others. These communications and the data we handle may include personal, confidential or proprietary information. We ensure that all our systems, data and electronic transmissions are appropriately protected with the latest technology safeguards and meet regulatory standards.
Despite these safeguards, a significant cyber incident, including system failure, security breach and disruption by malware or other damage could interrupt or delay our operations and possibly our results. This type of incident may result in a violation of applicable data security, privacy, or other laws, damage our reputation, cause a loss of customers or give rise to regulatory scrutiny as well as monetary fines and other penalties. Management is not aware of a cybersecurity incident that has had a material impact on our operations. See also ITEM 1A, “Risk Factors” and ITEM 1C, “Cybersecurity”.
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Expected Cash Outflows. The following table shows our significant expected cash outflows for the period indicated.
Payments due by period
(Dollars in millions)
Total
Less than
1 year
1-3 years
3-5 years
More than
5 years
Senior notes
Long term notes
Federal Home Loan Bank of New York
Interest expense (1)
Operating lease agreements
Gross reserve for losses and LAE (2)
Total
(Some amounts may not reconcile due to rounding.)
(1) Interest expense on long-term notes is calculated at the variable floating rate of 6.50%, as of December 31, 2025. This excludes interest on Federal Home Loan Bank of New York borrowings.
(2) Loss and LAE reserves represent management’s best estimate of losses from claim and related settlement costs. Both the amounts and timing of such payments are estimates, and the inherent variability of resolving claims as well as changes in market conditions make the timing of cash flows uncertain. Therefore, the ultimate amount and timing of loss and LAE payments could differ from our estimates.
The cash outflows for senior notes and long-term notes are the responsibility of Holdings. We strive to ensure that we have sufficient cash flow, liquidity, investments and access to capital markets to satisfy these obligations. Holdings generally depends upon dividends from Everest Re, its operating insurance subsidiary for its funding, capital contributions from Group or access to the capital markets.
Our various operating insurance and reinsurance subsidiaries have sufficient cash flow, liquidity and investments to settle outstanding reserves for losses and LAE. Additionally, the Company has entered into ADC reinsurance agreements to reinsure potential adverse loss development which resulted in reinsurance recoverables of $1,253 million as of December 31, 2025. Management believes that we, and each of our entities, have sufficient financial resources or ready access thereto, to meet all obligations.
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Dividends.
During 2025 and 2024, we declared and paid common shareholder dividends of $335 million and $334 million, respectively. As an insurance holding company, we are partially dependent on dividends and other permitted payments from our subsidiaries to pay cash dividends to our shareholders. The payment of dividends to Group by Holdings Ireland and Everest Dublin Holdings is subject to Irish corporate and regulatory restrictions; the payment of dividends to Holdings Ireland by Holdings and to Holdings by Everest Re is subject to Delaware regulatory restrictions; and the payment of dividends to Group by Bermuda Re, Everest International, Everest Preferred International Holdings (“Preferred Holdings”), Everest Re Advisors Ltd. (“Advisors Re”) or Mt. Logan Re is subject to Bermuda insurance regulatory restrictions. Management expects that, absent extraordinary catastrophe losses, such restrictions should not affect Everest Re’s ability to declare and pay dividends sufficient to support Holdings’ general corporate needs and that Holdings Ireland, Everest Dublin Holdings, Bermuda Re and Everest International will have the ability to declare and pay dividends sufficient to support Group’s general corporate needs. For the year ended December 31, 2025, Everest Re paid $200 million cash dividends to Holdings. For the year ended December 31, 2024, Everest Re paid no cash dividends to Holdings. For the years ended December 31, 2025 and 2024, Bermuda Re paid cash dividends to Group of $1.1 billion and $750 million, respectively; Everest International paid cash dividends to Group of $325 million and $100 million, respectively; Preferred Holdings paid cash dividends to Group of $36 million and $46 million, respectively; and Advisors Re paid cash dividends to Group of $76 million and $74 million, respectively. For the year ended December 31, 2025, Mt. Logan Re paid $35 million cash dividends to Group. For the year ended December 31, 2024, Mt. Logan Re paid no cash dividends to Group. See ITEM 1, “Regulatory Matters - Dividends” and ITEM 8, “Financial Statements and Supplementary Data” - Note 18 of Notes to Consolidated Financial Statements.
Market Sensitive Instruments.
Our current investment strategy seeks to maximize after-tax income through a high quality, diversified, fixed maturity portfolio, while maintaining an adequate level of liquidity. Our mix of investments is adjusted periodically, consistent with our current and projected operating results and market conditions. The fixed maturity securities in the investment portfolio are comprised of available for sale and held to maturity securities. Additionally, we have invested in equity securities.
The overall investment strategy considers the scope of present and anticipated Company operations. In particular, estimates of the financial impact resulting from non-investment asset and liability transactions, together with our capital structure and other factors, are used to develop a net liability analysis. This analysis includes estimated payout characteristics for which our investments provide liquidity. This analysis is considered in the development of specific investment strategies for asset allocation, duration and credit quality. The change in overall market sensitive risk exposure principally reflects the asset changes that took place during the period.
Our $45.4 billion investment portfolio at December 31, 2025, is principally comprised of fixed maturity securities, which are generally subject to interest rate risk and some foreign currency exchange rate risk, and some equity securities, which are subject to price fluctuations and some foreign exchange rate risk. The overall economic impact of the foreign exchange risks on the investment portfolio is partially mitigated by changes in the dollar value of foreign currency denominated liabilities and their associated income statement impact.
Interest Rate Risk. Interest rate risk is the potential change in value of the fixed maturity securities portfolio from a change in market interest rates. In a declining interest rate environment, interest rate risk includes prepayment risk on the $8.7 billion of mortgage-backed securities in the $35.1 billion fixed maturity portfolio. Prepayment risk results from potential accelerated principal payments that shorten the average life and thus the expected yield of the security.
The tables below display the potential impact of fair value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including $3.0 billion of short-term investments) for the period indicated based on upward and downward parallel and immediate 100 and 200 basis point shifts in interest rates. For legal entities with a U.S. dollar functional currency, this modeling was performed on each security individually. To generate appropriate price estimates on mortgage-backed securities, changes in prepayment expectations under different interest rate environments were taken into account. For legal entities with a non-U.S. dollar functional currency, the effective duration of the involved portfolio of securities was used as a proxy for the fair value change under the various interest rate change scenarios.
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Impact of Interest Rate Shift in Basis Points
At December 31, 2025
(Dollars in millions)
Total Fair Value
Fair Value Change from Base (%)
Change in Unrealized Appreciation
After-tax from Base ($)
Impact of Interest Rate Shift in Basis Points
At December 31, 2024
(Dollars in millions)
Total Fair Value
Fair Value Change from Base (%)
Change in Unrealized Appreciation
After-tax from Base ($)
We had $34.3 billion and $29.9 billion of gross reserves for losses and LAE as of December 31, 2025 and 2024, respectively. These amounts are recorded at their nominal value, as opposed to present value, which would reflect a discount adjustment to reflect the time value of money. Since losses are paid out over a period of time, the present value of the reserves is less than the nominal value. As interest rates rise, the present value of the reserves decreases and, conversely, as interest rates decline, the present value increases. These movements are similar to the interest rate impacts on the fair value of investments held. While the difference between present value and nominal value is not reflected in our financial statements, our financial results will include investment income over time from the investment portfolio until the claims are paid. Our loss and loss reserve obligations have an expected duration of approximately 4.0 years, which is reasonably consistent with our fixed income portfolio. If we were to discount our loss and LAE reserves, net of ceded reserves, the discount would be approximately $5.1 billion resulting in a discounted reserve balance of approximately $25.5 billion, representing approximately 66.8% of the value of the fixed maturity investment portfolio funds.
Foreign Currency Risk. Foreign currency risk is the potential change in value, income and cash flow arising from adverse changes in foreign currency exchange rates. Each of our non-U.S./Bermuda operations maintains capital in the currency of the country of its geographic location consistent with local regulatory guidelines. Each non-U.S. operation may conduct business in its local currency, as well as the currency of other countries in which it operates. The primary foreign currency exposures for these non-U.S. operations are the Canadian Dollar, the Singapore Dollar, the British Pound Sterling and the Euro. Generally, we mitigate foreign exchange exposure by matching the currency and duration of our assets to our corresponding operating liabilities. In accordance with GAAP, the impact on the fair value of available for sale fixed maturities due to changes in foreign currency exchange rates, in relation to functional currency, is reflected as part of other comprehensive income. Conversely, the impact of changes in foreign currency exchange rates, in relation to functional currency, on other assets and liabilities is reflected through net income as a component of other income (expense). In addition, we translate the assets, liabilities and income of non-U.S. dollar functional currency legal entities to the U.S. dollar. This translation amount is reported as a component of other comprehensive income.
The tables below display the potential impact of a parallel and immediate 10% and 20% increase and decrease in foreign exchange rates on the valuation of invested assets subject to foreign currency exposure for the periods indicated. This analysis includes the after-tax impact of translation from transactional currency to functional currency as well as the after-tax impact of translation from functional currency to the U.S. dollar reporting currency.
Change in Foreign Exchange Rates in Percent
At December 31, 2025
(Dollars in millions)
Total After-tax Foreign Exchange Exposure
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Change in Foreign Exchange Rates in Percent
At December 31, 2024
(Dollars in millions)
Total After-tax Foreign Exchange Exposure
