Everest Group, Ltd. (EG) Earnings Call Transcript & Summary

All right. Good morning, everyone. Thank you for being here, and welcome to the 2023 Everest Investor Day. It's great to see so many familiar faces in the crowd, and thank you to the thousands of folks that we have on the webcast worldwide. Thank you for your support of our company. We have a lot of exciting things to talk about today. First and foremost, obviously, is our cautionary statement, which I know you've all been waiting for. Before we begin, let me first mention that the presentations that you'll hear are based on primarily the information included the 8-K filed this morning, and in some cases, information provided in our earnings release at transcripts and other SEC quarterly and annual filings. May also profess the comments made during today's presentation by the one that Everest filings include extensive disclosures with respect to forward-looking statements. Management comments regarding estimates, projections and similar are subject to risks, uncertainties and assumptions. Noted in these filings, management may also refer to certain non-GAAP financial measures. These items are reconciled in our presentation and relevant financial disclosures. You'll hear from our leadership team throughout today. And as you can see, we've got a full agenda. There will be two 10-minute breaks at the intermission, and we'll close with a Q&A session to answer all your questions. Now let's get to the good stuff, guys. Please give a warm welcome to our President and CEO, Mr. Juan Andrade.

Thanks, Matt, and welcome, everyone. Thank you for joining Everest Investor Day. We are three years into our strategy, and I am extremely proud of what we have been able to accomplish since our last Investor Day in 2021. We have transformed our company, and we are stronger and better positioned for the market opportunities in both reinsurance and insurance. Since this management team took over in 2020, we have grown significantly by over $7 billion. But more importantly, we grew underwriting income by $638 million and reduced the combined ratio by over 5 points. Today, Everest is more diversified and a higher-margin business with lower volatility and even greater earnings potential. We have created a world-class business. Today, we're going to tell you more about this journey and the progress that we continue to make. We will also share with you our road map for the next three years and how we will deliver leading financial returns for you, our shareholders. We are executing from a powerful foundation. First, we have an exceptional broadly diversified reinsurance and insurance franchise. We are a top-five P&C global reinsurer with a strong and growing insurance business. Both businesses have a record of strong underlying profitability, and they're supported by top-tier underwriting talent, deep global capabilities, strong relationships and a robust A+ rated balance sheet. At our core is a strong and disciplined underwriting culture. It drives every decision and it gives us the firepower to deliver on our reinsurance and insurance strategy and to create a long runway for significant and sustainable returns. Our underwriters know their local markets and they nimbly deploy capital based on the best return opportunities. We apply the same discipline to managing our high-quality investment portfolio. We have taken deliberate actions to position that investment portfolio to capitalize on higher returns in this interest-rate environment. This is added to the consistency of our earnings profile. And finally, we remain prudent in our capital management. We have built a robust enterprise risk management platform and structured a bespoke multilayer capital shield to support our growth and profit objectives and to maximize shareholder returns more effectively. Our opportunistic $1.5 billion equity raise completed in May was a success, giving us additional flexibility as we continue to lean into the hard reinsurance market. In 2021, we told you that our primary strategic objective was to build a world-class global P&C insurance company with industry-leading returns, and we are delivering on that promise. When I became the CEO of Everest in 2020, I took over a business with the potential for achieving leading financial returns. To fully unleash that potential, we had to create a more defined, deliberate and holistic approach to strategy and execution across our global platform. We set out with a sound plan and a bold vision to transform Everest, and we have done that. We are a very different company today. One of our top priorities was creating a strong culture of accountability and execution. We built many of the elements for a world-class business from the ground up, and we drove an unprecedented level of discipline and transparency into every aspect of the business, including a universal risk management framework that drives our shared view of risk across the entire organization. It starts at the top and it filters down to our individual underwriters. We also made a pivot towards becoming a more digital company. Our focus on data and analytics helps us to dramatically improve our portfolio management and inject a whole new level of ownership throughout the organization. A perfect example is the enterprise risk management tool we developed to provide us with granular visibility into all of our portfolios by market and by region. At a glance, we can know how our business is performing in any region. We can identify underperforming areas to remediate portfolios quickly as issues arise. And opportunistically, we can dynamically move capital to areas with the best return opportunities. This is the kind of transparency that's also led us to a more deliberate and precise approach to how and where we allocate resources. With greater insights comes the ability to see around corners to anticipate what's next, so we can make the right bets for our company and to match them with the strategic investments that we carefully monitor and measure to ensure their value. Another driver of the transformative change was our strategic shift towards a One Everest collaborative model. This allowed us to tear down silos, drive information sharing for faster and more informed decision-making and deliver efficiencies in our underwriting, claims and operations. And supporting all of these three critical areas, we brought in the best underwriting talent and technical expertise. This, combined with our digital transformation efforts, led to better underwriting decisions, better claims speed and accuracy and better customer experience. And all of this resulted in a meaningful improvement in our attritional margins, further diversification in the business and reduce volatility in our earnings and enhance investment returns. And since our last Investor Day, our cumulative total shareholder return is approximately 40%, and the stock has risen 62%. We built this execution machine. It is durable, and it will drive sustained performance. This is what got us to the world-class business that we are today. And this is what will drive superior returns tomorrow and into the future. Turning now to talent. A theme that you're going to hear from my team mirrored by many times today, People are critical to the discipline and to the focus that I just described. When I became CEO, assembling a deep bench of talent was among my first priorities. I needed proven leaders who believed in our vision, who were capable, who were skilled and who were determined to get us there. Our leadership team is among the strongest in the industry. These experienced professionals epitomize the inclusive, collaborative and entrepreneurial culture that runs deep throughout this organization. Since the last Investor Day, we've also made some additional and excellent additions to our team. To name a few of our colleagues, Ricardo Anzaldua has joined as General Counsel, with a wealth of experience at many global companies, and I have known him for almost 20 years; Jill Beggs, she runs our North America Reinsurance business. And she has been a terrific addition to Jim Williamson's team. You're going to hear more from her later today. And you're also going to hear from Adam Clifford and Jason Keen, co-leaders of our international insurance business. Both are seasoned and well-respected professionals and excellent operators. I have known and worked with them for more than a decade. They also have my confidence to bring our global vision to life, and they're already making strong progress. It's a privilege to lead an exceptional team as we continue to create an exceptional business. Now turning to another key advantage of our strategically diversified reinsurance and insurance model. It gives us significant flexibility, and it is the key to driving sustainable industry-leading returns. With the One Everest approach that I talked about, we are effectively leveraging each other's strengths and bringing our businesses together to benefit from the shared synergies across our platform. The chart on the slide demonstrates how we can deliver our business through cycles. Our businesses are well diversified by geography, by product line and by distribution. We have a global customer footprint that spans more than 100 countries, and we have meaningful capacity to support our clients' growing needs. This diversification gives us enormous flexibility and optionality in how we manage our portfolio. We are not beholden to any one line or any one geography. We navigate and respond quickly to the opportunities and to the challenges that are presented across different cycles and across various global regions. And we can nimbly allocate capital to the best economic opportunities. And from our suite of diversified products, our regional and local leadership brings customized expertise and solutions to a broad range of clients around the world. Our technology investments are powering this efficient and holistic approach. We are harnessing them across our global platform to enhance all aspects of our underwriting at scale. I'll talk about this more in detail, starting with our reinsurance business. The favorable market conditions we're experiencing stand out in my 30 years in this industry. It's an exciting time to be a reinsurer in today's market, even more so if you're Everest. We are a lead market for many clients around the globe, increasingly viewed as the partner of choice, well equipped and aggressively leaning into this generational hard market where we disproportionately benefit from the ongoing flight to quality. This means that cedents want to work with us. They need more of our capacity, and we are the partner that they choose to work with. This allows us to set the most economically advantageous favorable rates, terms and conditions. And we're doing this while deepening our client relationships, growing in new lines and markets and improving the quality and profitability of our book while remaining within our stated risk appetite. We expect the robust pricing to continue through 2024 and into 2025. And we will make the most of it. We are less volatile and increasingly more diversified across business lines and geographies. Our strategy to penetrate more narrowly and deeply with our most trusted clients has opened new doors and broaden our scope of business. We have expanded our global footprint and expertise across increasingly margin-rich specialty lines, all while maintaining a flat and agile platform. Operating across a global business model, we have made it easier for our local underwriters to deliver even more quickly and to act on opportunity unencumbered by the bureaucracy typical of some of our larger competitors. And our ongoing progress to reduce volatility across the portfolio has positioned us well to perform in the current risk environment. To illustrate this point, consider the intensity of natural catastrophes just over the past two years. The industry was hit hard by Hurricanes Ida and Ian. Ian was the second-largest storm to hit the U.S. in history. Yet because of the work that we did to transform our risk profile, our share of losses was significantly lower than it would have been in the prior year. And despite these events, our property catastrophe business remained profitable. This is again proving to be the case in what has been another active catastrophe year, with industry losses already in 2023 well underway to over $100 billion-plus in loss. However, as a result of the reshaping of our portfolio that began in January and that continued throughout the year, Everest losses are a fraction of what they would have been just a few years ago, while achieving a material increase in expected and realized profits. The investments we are making in cutting-edge analytics keep us sharply attuned to the changing risk environment and to the underwriting cycles, so we can constantly shape that portfolio. Jim Williamson will provide more details about how we're driving that attractive opportunity. Now turning to the Insurance division. We are well on our way to building the next global P&C insurance leader. We are building on our established North America business and methodically scaling our franchise across the globe. And we have both the talent and the blueprint to execute. Mike Karmilowicz and his global leadership team have made great strides in advancing this strategy. We're doing this with intent and with precision. We have built an attractive value proposition that is meeting the needs of upper middle market and large companies with a broad suite of products and services. At the same time, we are steadily and consistently expanding margins through disciplined portfolio management and with our volatility reduction efforts. We strengthened our organization with a regionalized leadership team with the infrastructure and the capabilities to scale a connected and agile global platform. And finally, and importantly, we continue to attract best-in-class underwriting talent who execute our client-centric business model and drive our entrepreneurial culture. In North America, we're building on this progress to strengthen our focus on the customer, drive efficiencies across our operations and enhance the overall customer experience. We are aligning our capabilities to the specific needs of our different distribution channels through dedicated and customized solutions. We are deepening our engagement with brokers and insurers as well as penetrating new markets. And we're building on all of these efforts to expand our value proposition beyond North America to targeted international locations globally across Latin America, the U.K. and Ireland, Continental Europe and Asia Pacific. And we're making very good progress. In the past 24 months, we opened our doors in Chile, in France, in Germany and in Spain. And soon, we're going to be in Colombia, in Mexico, in Australia. But as I've said many times before to all of you, this is not about planting flags everywhere. We are following a disciplined strategy to create a sustainable business that is accretive to Everest's bottom line. We evaluate the opportunities to approach new markets only where there's a need for our value proposition and where we can be profitable. We're also building the infrastructure from the ground up, unencumbered by legacy systems with an open architecture approach that is both agile and optimized for the digital age. And we have the talent to do it. Our underwriting leaders are all experienced field operators who have an established record of execution. The path forward is clear. And just like in reinsurance, our primary business is poised to execute on our strategy and enhance margins. And now I'll talk about the future of the company. We're powering our company's transformation with significant investments in technology and talent that are unlocking synergies in our model, deepening our insights into risk markets and customers around the world and enhancing operations on a global scale. This has led to valuable efficiencies between our two divisions and across the entire organization. Everything from finance to human resources, an equation where 1 plus 1 equals 3. And since our last Investor Day, we have doubled down on our digital transformation with meaningful investments in technology, advanced data and analytics, connected capabilities and innovative new tools that drive better decisions and even more precision in our underwriting and claims practices. Operating from common frameworks, these digital customer-centric platforms are helping us to better manage our portfolios to price more efficiently, source better claims data and respond to market needs faster than ever before. And between our two divisions, we're benefiting from the power of existing relationships, underwriting expertise and risk management systems to strengthen distribution and enter and operate into new markets quickly. I want to turn now to our secret weapon that continues to set us apart from the competition, and that's our talent and our culture. This is a relationship business, and our established reputation allows us to attract the best people to Everest, and this isn't just a strategy, this is a movement. We are proud to have been recognized by the industry as a net attractor of talent and prouder still to be able to retain our best talent even in the labor market turmoil over the last few years. People join Everest to develop and grow their careers. People stay with us because they want to be part of a vibrant, collaborative culture, where their mark on clients and the company matters. Our commitment to being a best place to work has been widely acknowledged, and we have been the recipient of multiple industry awards. Our recent rebrand brings our mission to life. We underwrite opportunity. It's more than a slogan. This is our commitment to supporting businesses and economies who need our protection and to creating a sustainable value for all of our stakeholders. But commitment alone does not bring about progress, action does. We strive to be a responsible business, stewards of our environment and advocates for positive change in our surrounding communities, and it's truly a group effort. Everyone in this business is mobilizing to work with and for the communities around us to contribute to the kind of world we want to live in the future. And now I'll direct you to the screen, where you will hear from Everest General Counsel, who will talk to you about this commitment. [Presentation]

Thank you, Ricardo. As our results demonstrate, we have made significant progress, and we're only just beginning. We have multiple tailwinds at our back across all of our earnings streams, and we are well positioned to drive sustainable margin improvement across all of our businesses. We are in the midst of an industry-defining opportunity in reinsurance. And we believe that market is durable and vibrant. We have created a substantial and long runway for profitable growth in our insurance business, and our high-quality investment portfolio is well positioned to benefit from higher interest rates. We are laser-focused on underwriting and operational excellence, growing top talent across all of our businesses with a disciplined and rigorous approach to risk management underpinning it all, which will translate into more consistent results and lower volatility. The strategy that we outlined 3 years ago is working. We will build on this momentum to take it to the next level, driving even greater performance. Over the next 3 years, we're focused on capitalizing on our position to do 3 things: Number one, solidifying and building upon our lead market position in reinsurance. Number two, methodically expanding our insurance business internationally and across North America in attractive business lines and geographies; and number three, continuing to expand margin across the group, with a focus on delivering industry-leading returns. We are targeting an 89% to 91% combined ratio for the group. This is a meaningful improvement from our last Investor Day at 91% to 93%. And our strategic plan targets a total shareholder return of greater than 17% per year through 2026. This points to roughly a 20% operating ROE based on reported equity should current market conditions persist. And given the various tailwinds across our business, we believe there's an opportunity to generate even higher returns. We have exceptional flexibility in our platform as well as the financial strength to support the growth ambitions that we're outlining today. Our plan is not levered to just one set of initiatives. We have tremendous momentum in many different ways to achieve our end objectives. I'm excited about what's still to come, working with a great team to deliver even greater results for all of our stakeholders. We have the right leaders. We're driving the right strategy with the right combination of disciplined and bold execution. Simply put, we have all the right ingredients to continue succeeding. And with that, let me welcome Jim Williamson to the stage to talk to you more about reinsurance. Thank you.

Thanks, Juan, and good morning, everybody. It's terrific to be here to share how Everest reinsurance is creating value for our shareholders. As you heard Juan say, this is a great time to be a reinsurer and we're leaning into this market. I'm going to talk to you today about what makes Everest Reinsurance truly differentiated and why we are the preferred market for our clients, and why we should be for you as well. So how do we create value in the reinsurance business, nimble and diversified capital deployment, empowered local teams robust underwriting discipline fueled by world-leading analytics and financial strength? Those are the factors that create value in this business. So starting at the top of that list with nimble and diversified capital deployment. Everest has the breadth of capabilities and the geographic reach to serve our clients across the entirety of their P&C portfolio. And over the last couple of years, we've built the execution engine that allows us to meet our clients everywhere around the world. That results in lower volatility for Everest and better returns. Diversification matters in this business, and we are acutely attuned to the loss trends affecting all parts of our portfolio, and we actively manage that portfolio to get best results. An example that I would share with you is one that comes from the January 1 renewal. We've, for a long time, had a very diversified business in Continental Europe, but primarily weighted to global players. At the same time, we've wanted to pick up share with more localized companies who are consistent, high-margin reinsurance buyers. The January 1 renewal presented us with that opportunity. As our competitors stumbled, we were able to very nimbly move capital into new relationships and take meaningful share with some smaller companies that will provide us with strong returns for years and years to come. As I talk today about the investments we're making in our business, I want you to think about that through the lens of creating even more ways to nimbly deploy capital. So the second factor is empowered local teams. At Everest, our people truly are the differentiating factor, and we built a culture and an organization to support our people. A key priority for me over the last couple of years has been building a world-class leadership team to drive this division forward. We organized Everest Reinsurance into 4 key operating areas. The first is our North America Treaty business under the leadership of Jill Beggs. Jill is here with us today, and you're going to get to hear more from her in a few minutes. Jill rejoined Everest in 2021 after a 20-year career with another leading carrier, running insurance, reinsurance and innovation operations. The second operating area is our international treaty business. That's run out of Zurich by Artur Klinger, who joined Everest in 2020 to run our Continental European operation and then was promoted in 2022 to run all of international treaty. Arthur and his team are doing a terrific job growing that business. And again, you're going to hear some examples in a few minutes. Third key operating area is our global fac business, which is under the leadership of Tony Izzo. Tony joined Everest in 2021 after a long career in both broking and underwriting in this business. Fac presents some unique opportunities and operational processes. So we organize it on a global basis. even though the fac underwriters at Everest are embedded in our local treaty teams. And then the fourth key operating area is our Mt. Logan Re platform, which is under the leadership of John Modin. John joined Everest in 2021 after a long career in the ILS and investment banking markets. Overarching these operations is our COO, Chris Downey, who's been with Everest for 8 years. And Chris has really been on the forefront of driving our agenda of portfolio management and the development of new risk tools. And then last but not least, our reinsurance CEO and Global Head of Claims, Brent Hoffman, who joined Everest in 2022, having been Head of claims for a major international insurance company. Underneath that leadership team is simply the best underwriting talent in our business, and they embody the deep collaborative process and culture that we have here at Everest. They have connections in their local markets that allow them to execute with precision. And that translates into great underwriting judgments that are made in a timely and responsive way. And an example of this that I would share with you, again, comes from the January 1 renewal, but in a very different part of the world, over in South Korea. The South Korea market is one that we've typically not had a lot of interest in, and it's been characterized by cheap pricing and pretty loose underwriting standards. But in the run-up to the January 1 renewal, risk losses were really putting a lot of stress on that market, and we think have created a permanent change in market conditions. Our team on the ground in Asia had the connections they needed to understand that a change was taking place. And they quickly moved to secure leading share with some of the best South Korean underwriters there are. Those relationships that we developed during that process are now paying dividends as we build other opportunities with those carriers around the world. You simply cannot execute a strategy like that from 7,000 miles away, and nobody is faster than Everest. So coming back to our list, the third key factor, underwriting discipline fueled by world-leading analytics. So analytics are clearly an important part of that statement, but it really all begins with our core underwriting disciplines. As I said, we have a world-class underwriting team, and they operate with clear underwriting guidelines, and in a risk management framework that ensures that as they leverage their ample authority, they do it in alignment with our portfolio priorities. On top of that underwriting discipline, we overlay the analytics. We used numerous distinct models over the course of the last year to assess, price and manage risk. Some of those models are third-party models, but most are bespoke, and they were developed for Everest's unique portfolio in areas like Canadian wildfire, South African flood, U.S. thunderstorm and Australian Cyclone to name just a few. Analytics are critical in our business and the ability to deploy proprietary analytics sets us apart from most of our competition. And then the fourth factor, our financial strength. Everest enjoys a robust A+ rated balance sheet. We've written approximately $8.6 billion in reinsurance gross written premium year-to-date. And we will typically be a lead market for all of our global clients, which puts us in a position to shape pricing and terms and conditions in a way that's advantageous to Everest. So our clients get a top-quality balance sheet, they get an incredible and responsive service and we get superior returns, it's a win-win. So shifting now to a key question that's probably on the minds of everyone in this room, what is Everest's view of the property CAT market? Well, simply stated, the last 18 months have been incredible. We've been presented with a risk-reward trade-off that is almost unprecedented. And our expectation is that these conditions will persist through 2024 and into 2025. And keep in mind, that's occurring against the backdrop of 5 years of elevated CAT activity. The changes we're seeing in this market are both necessary and appropriate. Despite all these improvements, capital has been slow to enter our market. Other than our $1.5 billion equity raise, there's been really no meaningful equity activity. And ILS capacity is down significantly from prior years. So despite that dearth of capacity, there's also a flight to quality taking place in our business. Everest is at the forefront of that move. I'm happy to report to you that at both Monte Carlo and CIAB as we had meetings with a number of our clients around the world. Each and every one of those discussions was about how those clients could get more capacity from Everest. They want us to be represented more fully across their portfolios. This is one of the reasons I have incredible confidence that we will complete the deployment of our equity capital with the January 1 renewal. So how do these trends that I'm talking about translate into concrete results for Everest? Let me share a couple of pieces of data. The first, and you would have heard me say this on our earnings calls, but year-to-date, globally, property CAT pricing is up by more than 40%. And in our core North American markets, it's up by over 50%. And that builds on a risk-adjusted rate increase of 8% in 2022, so really significant movement. In addition to price, it's important to look at where we deploy our capacity. Approximately 90% of the incremental capacity we've deployed since the equity raise and approximately 85% of our incremental growth has come from our existing clients. And why is that important? Well, first of all, these are clients we know incredibly well. We know how they underwrite and we know how they manage risk, which means when we deploy capacity to them, we know what to expect in return. And the second reason it's important is because doing more with our existing clients drives better choices for Everest. We get more of the trades that we want with leading underwriters which is one of the reasons we have over 400 in-force treaties with our top 10 clients. If there is a profitable opportunity with a top client, Everest will be present. Taken together, we expect these actions and these trends to result in significantly improved risk-adjusted returns for Everest. And we're delivering on these improved economics while also improving our relationships and reducing the volatility of our business. So that's property CAT. What about the rest of the market? Well, the chart behind me gives you our current view of market conditions. And the first thing that I would point you to is what we're seeing in non-CAT property, which today is about 30% of our book, and that's a part of the market that is experiencing really strong tailwinds. In fact, later on, when you hear from my colleague, Mike Karmilowicz, he's going to talk to you about the opportunity in primary property. And those same trends are benefiting our pro rata property book. Second key area of focus is global specialty lines. And here, I mean things like aviation, marine, political violence, all of those markets are experiencing steep price corrections and improving terms and conditions. Why is that happening? Well, all you need to do is open your favorite newspaper and you see what, War in the Ukraine, war in the Middle East, tensions in the South Pacific. It's a dangerous world, and our clients are looking for more risk transfer solutions and they're coming to Everest. A third area of focus is core casualty. As of now, our view is that casualty pricing is in place where we can earn very strong returns. But we're also aware of trends around social inflation that are making this a little bit more difficult. And so we're hypervigilant around how we manage that portfolio, and we are not afraid to move away from trades if they don't make economic sense. What areas of the market are a little less exciting? I'd point to two: D&O and workers' comp. And those are both markets that have seen consistent price decreases, frankly, to a level that we don't view as sustainable in our reinsurance business. So these have become extremely small parts of our go-forward portfolio. There are different cycles affecting all parts of our business, and we manage at a granular level for just that reason. So how are we investing to sustain our advantage and our market position and making sure we remain the preferred market of choice for our customers? Let me share a couple of examples. First, you would have heard Juan say that we have customers in over 100 countries around the world. But there are some increasingly attractive markets where we're clearly underpenetrated, and Asia is one that I would point you to. We have a terrific team in Asia based out of Singapore, and they have deep connections in their local market. But at the same time, we're underleveraged in that market. Globally, our market share is 3%. In Asia, it's less than 1%, so that gives you an idea of the headroom that's available to us. And you would have heard me talk about what we're doing in South Korea. But what else is happening in Asia? And I'd point you to another market we're very excited about, which is India. India is an exciting and growing economy, and it's a global power and the insurance and reinsurance market in that country is becoming more interesting over time. We think about that business on a long-term basis. We're not looking to build it fast, we're looking to build it well, and we've built a terrific portfolio there on a diversified basis with best-in-class underwriters. Shifting from geography to industry vertical. Renewable energy is an area we're very excited about. And we're investing across Everest, both in reinsurance and insurance to take advantage of that trend. But one part of that business that I'm particularly excited about is the Parametric business we've built within Everest Reinsurance. That's about $100 million business for us today, and we leverage our deep expertise in analytics and underwriting, to create bespoke solutions for clients who are looking to navigate the challenges that come along with the energy transition. And then another key investment focus for us is in data and analytics. We've invested in data infrastructure, artificial intelligence, machine learning and the talent we need to drive improvements in data and analytics. And those investments are offering us unparalleled access to information and insights about our business. And that's making a difference for us today. This is not about some far distant future. We've rolled out in Everest Reinsurance a real-time portfolio analysis tool that allows us to understand the impact of one risk on our total risk profile. And you can imagine how powerful for us that is when we need to make a lot of decisions during a busy renewal period. We have an AI-driven contract assessment capability that, for example, in the event of a loss or if we need to understand our portfolio more deeply, allows us to analyze all of our contracts to understand how our contract wording might respond. And we've also developed an incisive client management dashboard that's shared by all of our underwriters around the world. So they know where we stand with each and every one of our clients across all lines of business. The impact of these investments and these tools is faster decision-making and the ability to move capital to highest reward opportunities. So no discussion of opportunity in our business would be complete without a discussion about risk. And for this part of my presentation, I'm wearing two hats. I've got my group COO hat on, and my Everest Reinsurance CEO hat on because it applies to both of our divisions. The fact is we've completely transformed the risk profile of this company over the last few years. And the chart behind me on the right is one you would have seen before. It's our earnings and capital at risk framework. Just as a reminder, the vertical axis is our earnings at risk or about a 1 in 10 PML divided by our expected annual profits. The horizontal axis is capital at risk or about a 1 in 250 PML divided by total group capital. And what you will see is that we've steadily moved from the upper right to the lower left on that chart as we've adjusted the risk profile of the firm. This year, our risk is roughly consistent with where we were in '22, despite the fact that we've really been leaning into this market. And our 2023 risk level is still well below where you would have seen us in a year like 2019. To make that a little bit more concrete, we look at the chart on the left, and what you see there is two of our peak zone PMLs. 1 in 100-year PMLs as a percentage of group equity. It's California Quake and Southeast windstorm. And you'll see that at various points over the last 6 years, meaningful decreases in total risk. So how have we achieved this risk transformation? I'd point you to three things. One, strong and disciplined portfolio management. In fact, we have a saying that we like to share with our underwriters. No matter how good the renewal period, no matter how much equity we may have raised you always start by creating your own capacity. In every portfolio, there's going to be at least attractive deal, start by moving away from it and putting that capacity to work somewhere else. So that's been critical. Secondly, we've significantly reduced our participation in aggregate structures and in the worldwide retro market, both of which contribute outsized volatility to our portfolio. And three, we've meaningfully moved out attachment points. We have moved away in a very significant fashion from attritional cat losses. And you've certainly seen that as the industry has experienced record levels of CATs this year but our own CAT results have been excellent. So how do we manage the competing tensions of rightsizing our risk profile, increasing profits and managing to build on our relationships? To answer that question, we're going to hear now from Jill Beggs, who, as I said, runs our North America treaty business. Jill was recently named to the Business Insurance 2023 Women to Watch list. I get to make a lot of decisions in this job, but one of the best decisions I've ever made was hiring Jill, so let's hear from Jill now. [Presentation]

Terrific. Thanks, Jill, and Jill will be joining us up here for Q&A at the end of the session today. There are two other areas of risk management I want to address. The first is climate change and the second is hedging. So when it comes to climate change, the first thing you have to understand is that it's real, and it's happening now. And the losses that are resulting from the climate changing are already in our data, which is why we're so focused on bringing together world-leading analytics based on the best available science along with all of the underwriting judgments I've talked about today. The climate itself, the changes in the oceans and the atmosphere are complex, and they're not affecting all perils the same way. So while hurricanes are certainly getting stronger and droughts and floods are becoming more common, there are other parts of the world where it's not as clear what climate change is doing, which is why we use the most recent research to continuously update our modeling. And then the second key aspect of hedging of risk management around the climate and CAT is hedging. And at the center of our hedging strategy is our Mt. Logan platform. We now have approximately $1 billion in third-party capital, up $250 million since the beginning of the year. And that has come to fruition because of all the work that John Modin and his team have done to build a terrific pipeline of investors who want to be aligned with Everest. Mt. Logan allows investors to take CAT risk in a way that is completely aligned with the risk we're taking on our own balance sheet, which is incredibly attractive and sets us apart from other options. Our plan is to continue to grow Mount Logan. And in a minute, I'll tell you what that's going to mean for our financials as we go forward. So I've talked about our investments, and I've talked about risk. Now let's talk about our financial objectives for the business. With expected level of annual CAT activity, we believe we can run this business between an 89 and a 91 combined ratio in each of the next 3 years. And there are tailwinds to that, which, over time, will mean the lower end of that range becomes more consistently achievable. So what are the levers that we're pulling to ensure that we hit those numbers? The first is careful management of the casualty cycle. As I said, our view at this point is that casualty is delivering strong returns. But again, we are very focused on the trends in that business. Everest did a really good job of taking advantage of the hardening casualty market over the last few years, growing on a pro-rata basis with leading customers, and we are managing it carefully to ensure we sustain profitability. The second key factor is driving continued rate momentum in property CAT. As I said earlier, North America market is up 50%, international markets up by more than 40% but I'm here to tell you the industry needs more rate, and we will protect and sustain the gains that we have already made as we move through 2024. The third is optimizing our hedging. And as I said, Mt. Logan is at the center of this process. We expect Logan to grow from 40% to over 50% of our ceded premium for Everest Reinsurance over the next few years, which means we will use fewer CAT bonds and ILWs, allowing us to retain more CAT profitability. Four, rightsizing commissions. Through a combination of optimizing our mix and negotiations, we expect commission levels to decrease over the next few years. And then fifth, maintaining our risk profile. We believe that a 6% to 7% CAT load is appropriate for Everest Reinsurance over this period. We have transformed Everest Reinsurance. We have the tools, we have the talent and we have the platform to be the preferred market for our customers. And we have the strategy and the clarity of purpose to deliver superior results for our shareholders. And with that, I'll turn it back over to Matt.

Folks, we're going to take a 10-minute break. We'll come back and talk to you about our insurance business. Thanks very much. [Break]

Mike Karmilowicz, the Head of our insurance business, Mike?.

Thanks, Matt. Good morning, everyone. Building our global primary insurance division is core to our group strategy. We've made meaningful progress over the past several years, and we're capitalizing on the strong momentum to propel us forward. Our success in North America has opened the door for expansion across the world and Everest Insurance is making its mark on the global stage. Our mission is clear: To build a premier global P&C insurance company that delivers strong and sustainable margins. We've been building a business from the ground up, using a thoughtful and focused approach unburdened by any legacy issues. We've assembled top talent, attracting and committed to a disciplined and empowered underwriting culture. And we're focused on upper middle market and large clients in attractive markets, those who value superior service and specialization. Our client-centric platform, coupled with our breadth of product and capabilities allows us to build a balanced and diversified portfolio and grow with our clients, and our strategy has delivered. We've been able to scale our business and deliver an 18% compounded annual growth since 2019, while improving our attritional combined ratio by 6 points. We finished 2022 with an attritional combined ratio of 90.4 and underwriting profit of $164 million. We've demonstrated our ability to execute and consistently deliver while improving our results, and we are just getting started. We're building Everest Insurance differently. As I mentioned earlier, our ambition is to be a premier insurance partner. It starts with an exceptional leader team executing a sound strategy. Our vision is to build on our success in North America and grow internationally while delivering consistent and solid results. Expanding internationally helps to diversify our portfolio, enhance our capabilities, create optionality by product, distribution and geography. And more importantly, it further reduces our loss ratio over time and delivering consistently attractive underwriting margins and improved business mix. Our expansion is supported by Everest's financial strength and its established global brand. To execute our strategy, we have a clear defined blueprint for success. The blueprint is our scalable and repeatable road map building upon our success in North America and supported by our rapid application across the globe. It's not just about implementing basic building blocks of an insurance company, it's how we connect those pieces together in a very thoughtful, deliberate manner, creating One Everest. This approach leads to a differentiated client experience and delivers leading financial performance. At Everest, we have a proven leadership team, all experts at what they do. I'd like to introduce you to those leading our two regions. First is Mike Mulray. Mike was just recently promoted to lead North America after serving as our Global Chief Operating Officer. Mike's unique knowledge of the organization, coupled with his vision for the future, makes him the ideal fit. You'll also hear from Jason Keen and Adam Clifford, who lead our International division. Jason and Adam joined us in 2022 with a vision on how to deliver international expansion. They were culture fits from day one and they bring extensive experience and they are deploying our Everest blueprint to build a world-class insurance organization around the globe. Jason, Adam and Mike are part of a broader global leadership team comprised of seasoned executives that share our conviction, passion for our vision. This team is made up of accomplished individuals with proven track records, deep industry experience and a focus on delivering superior results. They embody our One Everest culture and more importantly, are laser-focused on winning together. With this team at the helm, we've built a reputation as a company that fosters and develops talent. This makes great people want to work at Everest. Colleagues are attracted to our global platform, our flat and nimble organizational structure, our breadth of product and capabilities and ever impressive financial strength. But most importantly, it empowered culture where leaders can lean in and leverage their expertise and execute with urgency. This is a culture built on a solid foundation supported by strong governance with that analytics integrated directly into our claims and underlining platforms, so we can make better and faster decisions, which in turn deliver consistent profitability. This is why we win business and we keep business. Now that I've shared with you who will deliver our vision, let's talk about the opportunity in front of us. The estimated 2022 global premium is roughly $1 trillion. Our target of upper middle market and large accounts is $460 billion. That is split between North America and international regions. $280 billion is in North America, $180 billion is spread across 4 distinct regions internationally. United Kingdom, Continental Europe, Asia Pacific and Latin America. This is a vast opportunity, which we see tremendous runway ahead. Beyond our regional structure, we have a robust suite of products over 100 products, which we distribute through multiple channels across the globe. This diverse operating model allows us to attract exceptional in-market underwriting talent that is actually strong expertise and deep relationships. And through our platform, they either provide solutions on a timely basis that our distribution partners and our clients need most. We look for gaps in the market, whether it's in service, solution or capabilities. We then align our offering to meet that demand. In North America, we often hear about the fragmented experience of purchasing insurance by a lot of our insureds. They are eager to work with corporations and companies that engage with them, that actually connects you understand their business and can tailor solutions in a timely fashion. To that end, we are enhancing our overall underwriting local strategies to really develop targeted industry verticals. It's no different in the rest of the world. In our international regions, clients are looking for partners who have lead in multinational capabilities with the strength and agility to navigate a web of regulatory and local requirements, but also deliver exceptional customer service and we are building that. Whether North America, Latin America, Europe or Asia, it's a thing we've already talked about, local expertise, empowered underwriting and a focus on service. We execute with the customer line, which makes us the partner of choice. We're doing this all the while by driving profitable growth. Our local market expertise and target go-to-market strategy sets us up for success. But to succeed in the long term, we must respond nimbly to the changing market conditions and have the institutional fortitude to react when needed. This is where our ability to adeptly manage the market cycle and portfolio management comes into play. Cycle management is about being proactive. It's about being able to respond quickly to emerging market trends. It's not about quickly seizing the opportunity, but as much as having the discipline when to walk away. So as opportunities arise, whether that's property North America, aviation in Europe or credit political risk globally. We can lean in at quickly to capture our share. No better example than our current situation, our first-party lines. As market dynamics shifted, we responded quickly, leading into lines such as property and marine. Through the end of the third quarter in 2023, we're up 36% globally, doing this all the while by managing our volatility and lowering our PMLs. You can also see the execution mindset we approach in our portfolio management. Portfolio management is about intentionality, acting with focus and intensity to pull all the levers to deliver the optimal business mix. A great example of that is what we achieved in our workers compensation portfolio. In 2019, workers' compensation made up over 20% of the overall portfolio. Given the market conditions over the last few years, we deliberately dialed it down. Today, it stands at less than 10%. Let me give you another example. Despite its profitable contributions over the years, we decided to exit our admitted condominium business in Florida due to the regulatory and legal environment. This has actually increased in reduced our volatility and exposure to national catastrophes. Our offering provides optionality and agility, to lean in and be opportunistic, dialing up or dialing down to drive the optimal mix regardless of the cycle -- Issued operators, our ability to execute across the cycle and effectively manage our portfolios as an enduring asset, one that we are deploying consistently around our global platform. Our mission to be a global P&C partner means nothing without execution. We built -- we have a blueprint to deliver a clear path to success as we expand enhancing our value proposition for our customers and distribution partners and to deliver attractive returns, we must be focused on five key things: distribution, data and analytics, underwriting, systems and claims. In distribution, we are deepening our relationships with our partners, creating greater underwriting opportunity and increasing our relevance. We are scaling our core capabilities like technology and finance to drive greater efficiencies while deploying our proprietary models and data and analytics to actually drive better outcomes, leading -- driving better decisions leading to better outcomes. And we are keeping our underwriting claims and operations in the regions, empowering our teams to be closer to the customer where they belong. We are building global capabilities organically that have scalable infrastructure. Our technology ecosystem includes integrated underwriting systems, insightful analytics and claims capabilities. And our proven ability to execute ensures we can manage increasing throughput while maintaining an efficient expense ratio. This improves our customer experience and leads to increased retention. And finally, we are making investments in our claims capabilities. We filed leading global talent and invested in data-integrated systems to deliver better claims results. And it does not end there. There is a full runway ahead of opportunity, and we're leading to consistent attractive returns. We are building Everest Insurance differently, methodically with intention and with purpose. We have the people, the tools, the capabilities and the platform needed to execute and win. Over the next three years, we plan to deliver a combined ratio of [ 1992 ] in each of the next 3 years. To get there, we are focused on three primary key areas: first, portfolio management. We will remain nimble, agile and responsive using our expanded debt analytics platform to manage and track emerging trends quickly to deliver the most optimal business mix while driving margin. Next, our claims excellence. Our continued investments in talent and systems is critical. It's also crucial to our customer engagement, where the experience is as meaningful as the outcome. We're giving great effort to improve our claims accuracy to help reduce our loss ratio over the next three years. And finally, operational excellence. Improved efficiency will allow us to maintain our disciplined expense ratio. We're building an ecosystem comprised of integrated systems, automation and analytics to support a world-class insurance organization. As we look further, we expect even stronger results for our business, our customers and our shareholders. We're building our Everest Insurance division the right way, organically without compromise and with a relentless focus on performance. And with that, I'll turn it over to Mike Mulray, Head of North America.

Thanks, Mike, and good morning, everyone. Over the last several years, our team has demonstrated a track record of execution and continuous improvement as we've organically built our business. As Mike told you since 2019, the insurance division has consistently improved our combined ratio year-over-year. And this was led by North America, which also achieved significant cumulative underwriting profit during that period of time. We're transforming this business to be more balanced and diversified. As we build on this strong performance, we know there is meaningful additional value to be unlocked in North America. And we're doing this in 3 ways. The first is we're deploying our underlying expertise across multiple distribution channels. Second, we're increasing our focus on the end customers to improve cross-sell and retention. And third, we're continuing to proactively manage our portfolio to deliver improved results. So first, let's talk about how we'll deploy our underwriting expertise across three key areas of distribution: Retail, commercial, wholesale and specialty, as we see significant opportunity for profitable growth in a combined total addressable market of approximately $280 billion across the U.S. and Canada. First, in retail commercial, where we write property, casualty and financial lines. Our target customers typically fall in the upper middle market and large account space. This is a segment where we estimate the annual market opportunity to be about $130 billion in gross written premium, again, both in the U.S. and Canada. Here, we seek to leverage our broad suite of products and underwriting expertise through a One Everest approach. As Mike highlighted earlier, our insurers have shared frustration with how challenging it can be to place multiple lines of coverage due to fragmented nature of the market. So this ability to cross-sell product strengthens our relationship and connectivity with our customers, increases our retention and ultimately creates diversification of our portfolio and improve margins. To execute this retail strategy, we've evaluated our appetite across each of our products to identify areas where underwriting appetite is consistent and aligned. As an example, we recently launched a new middle-market property product to round out our casualty offerings in this space. And this year, about 45% of the accounts we've written in the Middle Market property segment have another line of business placed with Everest. And we can expect that number to continue to rise as we build on our multipronged customer approach. Within the wholesale and E&S channel, our excess and surplus lines business has a strong runway for profitable growth. The E&S sector, the P&C industry is rapidly approaching $100 billion and represented the fastest-growing sector of the industry last year, growing about 20%. And we're making significant investments in our wholesale underwriting teams to capture a greater share of this market. To attack this opportunity earlier this year, we announced the establishment of a focused and dedicated wholesale division for primarily three reasons. The first was to create exclusive access to products and capacity; the second was to enable faster service delivery; and third is to enhance overall product innovation and development within the space. And finally, turn to our Specialty segment. This represents about a $50 billion opportunity for us. It's a collection of unique and highly specialized products, each an area where Everest is a recognized leader, examples would include credit and political risk, surety and transactional liability. All our complex products and specialties that require ever strong financial ratings and our team's deep expertise and long-term relationships to succeed. In our credit and political risk business, we win because of our strong counterparty credit rating, our clear and consistent underwriting appetite and capacity and our talented team of global experts and global capabilities. The most frequent compliment we received from our brokers is that we are responsible, flexible. And when we put out an indication, they know Everest is good for it. This is a great example of knowing what's important to our trading partners and delivering on it consistently each and every day. And while each of these areas have their own nuances, all leveraged Everest strengths, and we plan to further improve our market position and performance in each. So beyond delivering our underwriting expertise, we are increasingly focused on our end customer, putting their needs first to achieve sustained success, and we're executing across 3 strategic dimensions. The first is local engagement. By empowering and strengthening our teams in each of these four regions across the U.S. and Canada, we can deliver that One Everest approach experience across multiple products, thus increasing consistency across the entire value chain. By normalizing our engagement and creating consistency of the customer experience, we can increase market penetration. For example, a hypothetical 50 basis point increase in our current market penetration creates approximately $1.4 billion of additional premium opportunities. The opportunity to grow with the right kind of customer they asked. The next dimension is specialization through industry verticals, and you heard Mike speak about this earlier. The industry-focused strategy requires deep knowledge and understanding of our customers' business and needs. Customers appreciate doing business with an organization that takes the time to deeply understand their needs. And we pride ourselves on being solution-oriented, focusing on our customers' needs and solving their problems. A few examples of industry verticals that we currently participate within Everest, our financial institutions, energy and life sciences and manufacturing, just to name a few. We're also currently in the process of expanding our existing private equity vertical, adding dedicated property and casualty underwriting expertise, targeting increased and improved penetration amongst portfolio companies, which fall within our existing underwriting appetite. This expansion allows us to leverage our already strong position and drive additional profitable growth. And next, in my opinion, the most important as a former risk manager and corporate insurance buyer is improving the claims outcome. Because at the end of the day, this is the product and the service that we're selling to our customers. This is the commitment we deliver to them. And while local engagement and industry specialization drive topline growth. It's our ability to manage claims effectively and efficiently that hits both top and bottom line. Strong claims service and accuracy matters and where claims are handled well, and the customer has a favorable experience, it drives increased retention and customer satisfaction and ultimately lower loss cost. We're making significant investments in our claims capabilities through both people and technology. And over the last 24 months, we've made a meaningful increase in our claims staff, attracting talent with deep industry expertise and technical knowledge to help drive claims excellence and provide insights and intelligence to inform our underwriting appetite and improve claim outcomes. We've also refined our organizational design to align technical claims teams around specialization and subject matter expertise. This allows us to optimize claims service and manage the impacts of social inflation. We've also made great strides from a technology perspective. We recently introduced a large language AI model against structured and unstructured data. This effectively scours loss adjuster notes, loss descriptions, claims codes for indications of claim severity, and the model flags for adjusters assisting them in prioritizing the work, putting the right claims in front of the right experts for earlier and fast adjudication. All three of these strategic dimensions: local engagement, industry specialization and investment in claims capabilities will deepen our connectivity and value to our end customer, increasing our relevance and unlocking additional value and margin for Everest. To successfully continue on our journey in North America, we're going to play to our 2 key strengths, which is proactive cycle management and granular portfolio oversight. The progress we've made in improving margins over the last several years is directly tied to the relentless focus and execution across these two strengths. We execute with a clear view on current market conditions to stay ahead of emerging trends as conditions change and evolve. This requires the data and analytics to provide continuous surveillance across emerging trends, such as rate exposure, loss cost and other relevant variables as these factors can and will change quickly. Here, you can see a chart summarizing our current view and outlook of the market opportunity. Our ability to respond quickly in market cycles and act decisively to emerging portfolio issues is the difference between delivering consistent underwriting margin versus becoming prey to the latest market correction. We continuously seek to ensure our portfolio is optimally balanced and diversified. And that means looking at market cycles where various opportunities present themselves and what trends we see emerging in our data. Some of the key factors we think about as we're evaluating risk and portfolio composition include what's the macroeconomic outlook, we evaluate the historic and future expected profitability of the space. What's the relevance of the product to the top customers we're going after? What's the capital consumption necessary? And then we evaluate the competitive landscape and barriers to entry. Now as we evaluate each of these criteria, we see several opportunities in the market. I'll highlight just two. The first is property. As Mike talked earlier, we're leaning into property, especially in North America. Throughout 2023, we moved quickly to support customers at a time when they needed us the most, while also achieving a reasonable risk-adjusted return. To elaborate in the last 12 months at the end of the third quarter of 2023, we grew our property portfolio in North America by about 30%, while at the same time, materially reducing our 100 gross apparel PML, reducing volatility of portfolio. What does that mean? The ultimate economic value per exposure unit has improved significantly, and therefore, resulting in improved margin for the firm. And finally, in our specialties area. These products are unique, and we continue to survey the market to identify niche opportunities for unique products, which would benefit from Everest capabilities. As an example, recently leveraging our international colleagues expertise and aviation, we recently invested in building out an aviation team in Canada. And in the past quarter, have made significant [indiscernible], winning new opportunities driven through the One Everest approach in collaboration across our teams in the U.S., Canada and U.K. When we see an opportunity in the market, we seize it, leveraging the full scale of resources and expertise across our global company. Our One Everest approach allows us to work across geographies, optimizing our portfolio, along with our reinsurance colleagues and demonstrating strong and consistent risk management. So what else are we doing to unlock our strategy and unlock the additional value in the organization? Well, we're leaning into three core capabilities of the organization, talent, technology and data and analytics. We'll continue to be strategic about where we place our talent to make sure we're going to where our customers are. To further execute on our local engagement effort, we're strengthening our regional presence, the manage the way our distribution and underwriting teams operate in the field. This increases our relevance and further enhances the Everest experience to capture more of our target market. We're also continuing to invest in advanced technologies to drive greater operating efficiencies. One avenue we're embracing is automation. We recently automated a routine data entry process, eliminating the need for our underwriting teams to reenter information multiple times. And this creates documentation automatically saving about 10 million minutes per transaction. We introduced this time-saving enhancement in our Property segment during the busiest period of time during the year. This meant underwriters and underwriting assistants could move through transactions faster and more efficiently freeing up time to evaluate more opportunities and ultimately binding more business. We're also increasing efficiency and throughput through adapting systems for peer-to-peer engagement, working with some of our largest trading partners, we're evaluating how we can connect their agency management systems to talk directly into our underwriting platforms. This is a step towards straight-through processing. The first objective is to automate the standard submission intake process to eliminate the need for duplicate data entry and create a higher quality of information. And we expected our first proof of concept to be completed early next year. For every transaction, we can respond to it faster. And every policy, we can issue more quickly, the higher accuracy, there was a better experience for our trade partners, which is important, but it also gives us back time. Time we can reinvest in improving our underwriting capabilities, strengthening our relationships and driving efficiencies that create operating leverage, so we can maintain our highly competitive expense ratio. And finally, in data and analytics, we're rapidly moving to a place where iterative just-in-time models for claims and underwriting is becoming a reality. This makes making better decisions in claims and underwriting which allows us to have better outcomes, which ultimately, again, lead to improved margin. So if there's one thing I hope you could take a few from my comments today is that in all of my years with Everest, we have never been positioned better than we are today in North America for continued success. We truly are building from a place of strength. And with that, I'll pass it over to my colleague, Jason Keen and Adam Clifford, who'll walk you through some of the exciting plans we have for our International division.

Thanks, Mike. Good morning. Adam and I are delighted to talk to you this morning about the expansion plan for our international business. Adam and I have lived and worked internationally for over 20 years. We build high-performing insurance businesses. And as mentioned before, we've worked with One for over a decade. The team we are building has held executive positions in large global insurance companies, years of experience -- we feel the strength of our business plan is in its simplicity. We know the clients, we know the brokers and importantly, they know us. Years of market trading credibility combined with a brand such as Everest is truly compelling. So how do we think about building an international insurance business organically? Well, for one, it's methodical, and we have a defined blueprint. We are crafting a sustainable and profitable business that is now and will continue to be accretive to Everest Group. Insurance companies have tried this before. So what makes Everest international different? We'll explain this through the course of the presentation. Over the past 5 years, following a series of major global events, COVID, Wars, elevated CAT activity and inflation, to name a few. The global insurance market has seen a lot of change. Following significant loss activity, our competition has reverted to portfolio remediation. We see strong global pricing adequacy and this provides a strong position to deliver profitable underwriting returns. So looking back, a couple of years to the end of 2021. Everest International was predominantly a London-based wholesale business, trading specialty lines. As we near the end of '23, what have we done in the last couple of years. We're now trading in 4 regions: U.K. and Ireland, Continental Europe, Asia Pacific and Latin America. We structure our portfolio into first-party and third-party lines and to clarify first-party lines as property, marine, aviation, energy and construction. These are predominantly short-tail exposures. And third-party, casualty, financial lines and corporate Accident & Health. We see this balance already delivering lower loss ratios, lower acquisition costs, which delivers better combined ratios. So shifting our focus to the future. We're going to walk you through the opportunity before us, and we really feel it is immense. To take advantage of this opportunity, we focus on three areas: one, intentional and incremental geographic expansion; two, diversified and relevant product offering; and three, delivering underwriting experience and capability, we know our customers value. In addition to these pillars, we are leveraging the reputation and infrastructure of our North American colleagues. Together, we truly are building a global insurance company.

So let's start with our first pillar, which is the geographical expansion. As Juan has told you, we've established underwriting and claims teams in those 4 regions. In Spain, we've built an Everest business center what we call the EBC. This brings together the processes where we gain operational efficiency at a lower expense. This gives us scalability and supports all of the branch network. We continue to be solely focused on large economies where there's sophisticated commercial P&C insurance buyers. And in doing so, we look at four aspects: the market size and maturity. We are not creating new insurance buyers. We are simply leveraging an existing network, working with clients we've known for decades and delivering to brokers that are welcoming Everest. Two, a client base where we see an alternative to lead a multinational insurer, there is frustration at the moment with the lack of service with a number of lead markets around the world. There's too much legacy, too much M&A, there's poor performance and frankly, disenfranchise underwriters. This is why an organic build is so valuable. Where there is talent pool deep industry knowledge and experience. So we can deliver on our promise to our clients and also uphold the values and behaviors we have at Everest. For example, we have a new aviation team. Constructed experienced specialists from 6 insurance companies and this blend of talent is delivering a best-in-class proposition in a time when the aviation market needs strong leadership. We've built this business in just over a year, and it offers a new commitment to the market. Four, where we can offer products that are relevant to clients. It could be property in Chile for earthquake capacity or energy for clients to transition into a more eco-friendly footprint or simply cyber in a fast-changing world of increasing exposures. So these four regions that we have create significant opportunity for us here at Everest. And we're going to continue to look at other opportunities. But we will only do this in a thoughtful way. When we're ready, when we see value and where we believe we can deliver the best of Everest to our clients. Let's take Continental Europe, for instance. Large European insurers have lost focus on the sophisticated P&C buyers because the bulk of their revenue sits within a general insurance sector. Commercial P&C buyers are demanding consistent underwriting appetite and lead market behaviors, through risk engineering, multinational and lead capability. As capacity is reduced and major insurers have wavered between the pricing and portfolio actions, Risk managers are looking for stable and experienced capacity that they can recommend to their board. All of our businesses right now have leaders that are truly world class. They are execution-focused and they are frankly leaders in the industry. As with all of these regions, we have identified significant opportunity and in each, there is a large runway for long-term, sustainable and profitable growth. Our product suite of first and third party are relevant for the client demands, giving us the ability to scale a true global underwriting company.

So who are our clients? Well, we are not targeting the lower middle market and small commercial clients where we would compete against large national domestic insurers, but where we also see high acquisition costs and high attritional loss ratios. We're targeting the upper mid-market and major accounts, and our clients have sophisticated commercial P&C buyers. We predominantly see these businesses with a revenue greater than $250 million. The client qualification has a combination of factors, large domestic and/or multinational assets have a risk management function that is continuously engaged in its insurance program, partners with a large global or domestic insurance broker intermediary and its core business is in a specific industry that we either know can return profitable margins, and ultimately known to our underwriting teams or fit within its target risk profile. These clients require experience insurers to understand and service their business. We are building businesses where markets, in markets where we see our competition continues to stumble. Mergers and acquisitions over the past 5 to 10 years have led to huge levels of distraction, where insurers are internally focused as they integrate and inevitably restructure. Clients and brokers do not benefit from this, and as a consequence, industry levels have dropped, service levels have dropped. Market conditions and integration efforts have led insurers remediating portfolios to implement changes in their risk appetite, reducing the amount of capacity they deploy in the field. And we see this with the same with claims payment authorities. There seems to be a real lack of confidence and a lack of accountability. This leaves clients with problems and not solutions. We can provide solutions.

So similar to our colleagues in North America. We're building the bench strength and core fundamentals of talent, technology, analytics to support our international strategy. We've spoken a lot about culture and talent, identifying people with a proven track record to deliver decades of experience, allowing clients and brokers to divert their business to trusted and known underwriters. This is not about price. We employ deep consideration on talent acquisition and have assembled a team that a rich market experience and more importantly, the right behaviors, delivering on our culture and our values. And we are delighted that so many great people have chosen to join us. These phenomenal talents are approaching us to join our organization. And as Juan noted earlier, it is a movement and talent does attract talent. Technology and analytics, we are building an integrated global platform that aligns our North American business with Mike Mulray and our international business. An example of this is a system called [ Peak ]. It's one of our proprietary analytics platforms built in North America, and we rolled it out in international in three months. This leverage will help manage cost to build and speed to market. Now let's turn our attention to lead and multinational capabilities. As I mentioned earlier, we know areas in the market that are underserved and underserviced. Capacity is only the door opener. Lead and market capabilities is a future promise that our buyers are demanding. Clients are looking for more alternatives that are currently available today in the market. That is why it's critical for us that we moved to full deployment in this over the coming years. Insurers who lack these capabilities must continually play a role of supporting capacity with all of the pricing and terms dictated to them. Leading placements also allow us to charge other insurers lead override fees. Clients are seeking to engage us now, adding as participants on the current placements knowing that we will be a lead insurer in the future.

As you've heard a few times, we have a blueprint. As we grow our business around the world, what we want to ensure is a consistent framework. Blueprint is about connectivity between North America and international and is especially critical as we deploy a methodical deployment of people, resources and capabilities. It gives us confidence about execution and strategy as we pass our initiatives through a systematic checkpoint process. The blueprint addresses a core industry standard; however, it's knowing how to integrate each fundamental aspect, which is our competitive advantage. That culminates in our ability to deliver underwriting margin consistent with the insurance division and with potential upside. And why do we think this? We see what poor execution can do to a brand or a business. And this lack of planning and structure is what drives our conviction that blueprint is a differentiator. As we build our international footprint, this allows us to assess where we are in our development, which in turn, informs our next steps. It's mindful and it's measured and it's thoughtful. As an example, we've used the blueprint as we structured our Chief Underwriting office, combining our technical and our commercial underwriting activities, and as we build our continually growing portfolios, we do so with consistency and with discipline. The blueprint is about strategic execution, no regret decision-making, expense management and ultimately underwriting returns. Blueprint creates that value and we know how to use it to our advantage.

So today, we've given you a good sense of how and where we're growing the company. This will continue to be accretive to the insurance division, but let me just summarize a couple of points as we close. Jason and I have built successful businesses before. We know the clients, we know the brokers and so does our team and they know us. We are delivering a methodical organic build that is Blueprint enabled. We have designed a portfolio on first- and third-party basis. It will be accretive to Everest Group. We are going to provide lead a multinational capability to our clients. And more importantly, we are one global business. And just finally, you're going to see us produce consistent market-leading results as we scale the true underwriting company. We thank you for your time today, and I'll hand over to Mark Kociancic, our Group CFO.

Good morning, everyone. It's a pleasure to be here today and have a chance to talk to you about Everest in our new strategic plan. What we've accomplished thus far and what we're going to do in the future. As Group CFO, I'm going to walk you through our financial and capital roadmap today, and I'll also speak to investments and reserves as well, so let's get started. At Everest, we have one financial objective, and that is generating industry-leading financial returns as measured by total shareholder return and that's book value per share growth, excluding unrealized gains and losses on fixed income securities, plus dividend per share growth. And we're going to do that through the strong execution of our two underwriting franchises and our investment portfolio. We've got an entrepreneurial culture. We're focused on execution and accountability. And those three tenants serve as the heart of our value creation proposal. We're committed to an A+ financial strength rating and that's something our clients and stakeholders demand of us. Our underwriting franchises and our investment portfolio provide a diversified earnings profile and when you combine that with our focus on disciplined capital allocation, that's what allows our businesses to manage cycles effectively. We've got a strong balance of liquidity on our balance sheet, and this provides operational flexibility going forward. And lastly, we measure performance relentlessly. We seek to review, learn and do better in the future. So how have we done since the last plan? We've expanded our franchises on both the top line and margins, as you can see. We've taken deliberate initiatives to improve our portfolio and manage CAT volatility. And our portfolio is becoming more diversified. As Jim mentioned earlier, we're being disciplined in seeking superior expected returns. And on the CAT side, this tends to be at higher CAT layers and we're also further diversifying our zonal CAT capacities. We've grown premium. We've expanded our franchises globally. We've improved our attritional combined ratios. We've increased operating income and delivered strong earnings contributions from both underwriting franchises and our investment portfolio. We've exceeded our total shareholder return objective from the last plan despite an elevated natural catastrophe environment. We've strengthened our capital position and we've lowered our cost of capital. The Everest of today is different than the recent past. We're positioned for stronger and more consistent returns. So let me speak to investments for a few minutes. We've got one portfolio, two strategies. Our core portfolio strategy is all about managing fixed-income assets against our reserves, and we emphasize having a high credit quality, strong liquidity and matching durations. We want to maximize portfolio yield. We also have a total return strategy, and that's modeled, sized and managed to maximize returns. It adds diversification and it also efficiently uses capital. And these two strategies in our portfolio provides greater overall profitability, reduced volatility and the potential for upside, getting alpha on that total return portfolio. Our fixed income portfolio benefits from a high degree of credit quality, and that further provides ballast for a consistent performance in our NII. Our portfolio is well positioned for the current elevated interest rate environment as well as the turbulent macro environment. Our investment portfolio is complementary and it diversifies our earnings and risk profile. Our invested assets have increased by over $9 billion since 2020. Our book yield stands at 4.2%, and our reinvestment rates are close to 6%. We've got 23% of our fixed-income securities and floating rate structures, and these represent a good match against reserves given their high credit quality and other characteristics. We have a short duration of 2.7 years. Our credit quality is at AA- level and private equity represents approximately 6% of assets under management. It's historically outperformed public equity and comes with lower volatility as well. Our strategic asset allocation is broadly consistent with our prior Investor Day and we have a prudent balance of fixed income and total return assets. Our portfolio is designed to provide a strong earnings stream with upside from our alternative assets. Let me speak to reserves as well. We've done a lot over the last three years. We've strengthened our reserving process, and it begins with conservative initial loss pick selections and that's reflecting elevated inflation estimates from both economic inflation and social inflation. We also have four levels of internal peer review, and we have two independent in-house reserving teams. We've increased the velocity of feedback inside the company between underwriting, pricing, claims, reserving and management. We're reviewing each line quarterly, and we can update factors in real time. We've invested in reserving tools and talent globally. We hired a new Chief Actuary last year, Dave Harris, somebody that I've worked with for well over 10 years. And all of this gives us confidence to read, react and adjust our reserve portfolio as conditions change. We have the objective of booking our company's reserve position at management's best estimate plus a margin. Our reserves are broadly diversified by line and also by geography. And this increases the stability and reduces the risk of our reserve portfolio. Over the last several years, we've got more pronounced risk factors, economic inflation, social inflation, global events like COVID, geopolitical events like war, and a large part of our reserve position has grown since 2020 when rates began to increase significantly on longer tail lines. The risk environment is heightened so will be prudent and we'll recognize bad news on a timely basis and will take time to recognize good news, but we are confident in our company's reserve position. So capital structure is another driver of shareholder value. We're committed to the A+ financial strength rating, and that's key to our stakeholders. And we showed that during the last 1/1 reinsurance renewal cycle as Everest really benefited from the flight to quality in that marketplace. Our debt carries a low average cost of approximately 3.9%. And when we consider future debt issuances, we'll emphasize long-dated tenors, laddered maturities. We want to achieve regulatory and rating agency credit. We want to ensure that we have a low cost of capital, and we expect the long-term debt leverage ratio in the 15% to 20% range. At Everest, we have a well-thought-out liquidity management paradigm, and it comes from three primary sources. First, we have a very strong positive operating cash flow profile, positive for the last 10 years despite having some years with significantly elevated natural catastrophe levels. We've got liquid asset portfolios with readily marketable securities and we also have a $2.5 billion federal home loan bank facility at our disposal. We have other advantages, we have a corporate structure that allows us to optimize their collateral requirements. We prudently manage PMLs. We benefit from high-quality reinsurance, and we also have modest debt leverage. Our capital management framework is unchanged from the last Investor Day, and we look at it over the medium and long term. So let me walk you through it. First, we want to make sure that we have adequate capital and liquidity to support an A+ financial strength rating. We're focused on accretive growth accretive to our total shareholder return objective. We want to offer an attractive quarterly shareholder dividend. We do opportunistic share buybacks and inorganic opportunities or M&A are going to have a very high bar. They're not needed for us to achieve our objectives as we believe our organic plan positions us well and we'll continue to optimize in our underwriting capital structure and our balance sheet capacity. So in addition to the debt and the equity that we currently have, we have other structures at our disposal. Mt. Logan, our third-party asset manager, expands our capacity. We tactically use ILWs. And historically, we've been a large CAT bond issuer and this provides us with the flexibility on when and which layers to issue upon. So this past May, we raised $1.5 billion of fresh equity and we're on track to deploy that, and we're fully deployed on the investment asset side. And we've initially deployed the bulk of that capital raise to the reinsurance franchise. And it begins by increasing business with existing reinsurance clients, and we'll also seek new business with high-quality cedents as well. And third, we'll optimize our hedging strategies as we become more of a gross underwriter, will be fully deployed by January 1, 2024, on that equity raise. And the long-term deployment of capital, I expect to be more towards our international insurance expansion opportunities. At Everest, expense management is a competitive advantage, and that's something that will continue as we go forward. As we make investments in technology and human capital to support our business, you can rest assured that we have a disciplined approach with C-suite oversight and a profitability focus to every investment. Here at Everest, we benefit from an efficient global legal entity platform, and this really serves as an additional capital management lever. We have leading U.S. and Bermuda balance sheets, and this allows us to continuously optimize risk and capital. We try to prioritize legal entities in jurisdictions with stable political regulatory and legal systems. And our asset portfolio is focused on major global currencies, predominantly the U.S. dollar, but also the euro, British pound, Canadian and Aussie dollars, and this further protects and insulates our balance sheet. So let me speak about our financial roadmap and how we're raising the bar on our return profile. Because we've exceeded our expectations from the first plan, and we're targeting a total shareholder return of greater than 17% based on our current financial assumptions. And this aligns well with returns generated by other leading companies in the industry. Our executive compensation is aligned with our total shareholder results, and this aligns us well with shareholders. We have 3 drivers of uplift in our financial target, underwriting investments and capital management and we'll actively manage our capital into the best opportunities will be very focused and disciplined on capital and resource deployment. And I can envision scenarios where our total shareholder return but be meaningfully higher as our franchises are scalable and diversified to capitalize on market conditions. And it doesn't matter if it's a different pricing environment, Nat CAT environment, interest rate environment or investment asset environment. Today, our total shareholder return target points to approximately a 20% operating ROE based on reported equity as at September 30, 2023. Our primary target is to provide industry-leading returns as measured by total shareholder return versus our peers. And as you can see, we're improving across all metrics. We expect a group and reinsurance combined ratio between 89% and 91%, we expect an insurance combined ratio between 90% and 92%. Our combined ratio includes a CAT load of approximately 6%, and we'll continue with our 2 strategies in the investment portfolio. We expect the new money yield between 5% and 6%. We'll maintain an A+ financial strength rating, and we expect a 15% to 20% long-term debt leverage ratio. We're in a great position today, and I'm excited about our prospects and our ability to deliver on this plan. And our strategy provides substantial operating flexibility over this plan and into the future with lots of ways to perform at higher levels of financial performance. There's a lot of drive and resolve in this management team to continue building our company, and you can expect all of this will drive meaningful, consistent and attractive value creation for our shareholders. Thank you. With that, I'll turn it back to Juan for closing remarks.

Thank you, Mark. So this morning, you heard about the opportunity we have created. But even more exciting is the opportunity that we have ahead of us. As a lead reinsurer and preferred provider, we have every advantage to capitalize on the powerful market tailwinds that Jim talked about and we're also building on the profitable growth of our primary insurance franchise to scale our value proposition globally. We support it all with a powerful balance sheet, investment returns, a culture of disciplined underwriting and a management team you can count on. We have made significant progress. And over the next 3 years, as we execute on our strategy, we expect to reach even higher levels of performance. This means higher returns with less volatility. As I mentioned before, our plan should generate a total shareholder return of greater than 17% each year, which, as Mark said, this equates to roughly a 20% operating ROE in 2024 based on reported equity in the current market. With that, I will close where I began. We are building a world-class P&C company that will continue to deliver leading financial returns. I am confident that we have the right team. We have the right strategy and all the momentum in the world to execute. Everest, is the company to watch. Thank you.

Ladies and gentlemen, we'll take another short break for about 10 minutes, and we'll come back to take your questions. Thank you. [Break]

All right. Ladies and gentlemen, we're now going to start our Q&A session. Because we have the webcast, and of course, we want to bound by Reg FD. [Operator Instructions].We've got a number of folks here. We've got one for a Elyse. I've got one for Josh, for Mike, Greg. He's Elyse, we'll start with you. .

Elyse Greenspan, Wells Fargo. My first question, of the $1.5 billion of equity capital that you guys raised, how much has been put to work so far? And how much is left to put to work at January.

Jim, why don't you...

Sure. So you'll probably recall when we were raising the capital and then in subsequent earnings call discussions, the way we had sort of laid that out was that we expected the capital deployment to happen about in proportion to how our renewals occur. And so if you think about the renewals we've had since the capital raise, it was really 7/1 was the first renewal. There's been a little bit of activity since then in addition to some renewal activity at [ 10/1 ], et cetera. We've also had some private placements. And then the real large portion and the completion of the deployment would occur with the January 1 renewal because it's 55% of our book renewing at Jan 1, and we're on track with that. So the proportion of renewals has really driven the capital deployment. It's been pretty even that way. .

So 55% is left more -- because you said 55% of the...

I would think about the proportion of Jan 1 is 55% of our book, 7/1 is more like 15%. So it's going to be 3.5x as meaningful to get to the January 1 renewal. .

Okay. And then my follow-up on the greater than 17% total share return guide, how much is expected to come from buybacks and dividends in that assumption? And then if the broader investment yield decline or the pricing environment starts to soften over the 3-year period, would you plan to use buybacks to help you guys still achieve the 17% .

So we have standard assumptions for dividends and buybacks over the course of the 3-year plan. I'm not going to be more transparent than that other than to tell you it's in there. We're obviously going to privilege the organic growth simply because of where we are in the hard market cycle right now. But capital management is definitely a lever that we can use if things change radically, and we're not able to remunerate it adequately going forward. .

Great. Thank you, Elyse. Let's go to Josh, next.

Josh Shanker, Bank of America. It's been a fantastic 3 years for Everest. Congratulations on that. And great 3 years for a number of top-tier reinsurance performers. It's not been such a great decade for reinsurance underwriters generally, however, However, it's been a great decade for reinsurance brokers. And looking -- I guess this is for Jim and Jill, maybe Juan has some thoughts. To what extent have your partners disintermediated the industry over the past decade? And as we look at decade ahead, I realize they are not adversaries, they are partners, but to what extent does -- do the carriers who are taking all of the risk get a piece of the pie that's equivalent to where it is today, if not better, than it is...

Yes. And you would have heard me comment in my conversations about the fact that we have experienced this elevated cat activity. It has been challenging on the underwriting side of the equation. And so I think what that's done is obviously created. There's a capital gap, and that's happening in the face of increasing demand from our customers more capacity. That's driving rate increases. But there's also been a psychological change among underwriters, which is why I think this market condition is going to persist through 2024 into 2025 and hopefully beyond because of this change point of view around where returns need to be to justify deploying capital into markets like Property Cat. I do think there have been some moves by distribution to maybe play in different parts of the value chain. I think what you would have seen though, and we certainly saw this in the run up to January 1, not very successful in terms of accumulating capital and putting it to work on an underwriting basis. And I think that's because capital providers know you need a high-quality underwriting operation to successfully deploy capacity and get a return. So we're pretty satisfied with where the balance of trade currently stands between distribution and manufacturing in our business. Great.

Let's go to Greg.

Greg Peters. So with that I'll just hold this out here. Okay. So my first question would be Juan, in your opening comments, you mentioned about some new initiatives in new areas of the world, and you said you're not interested in planting flags. And then -- in some of the other comments that were talking about investing in people and the new systems. And so I'm curious how you strike up the balance of the upfront expense of new initiatives in the context of hitting your return targets?

Yes. Thanks, Greg. It's good to see you, better than Zoom. It all ties together to our strategy. So we discussed that 1 of the key things for our company is really to be very well broadly diversified by geography, by product line, by distribution. In the insurance part of it right now, we are seeking greater diversification from a geography perspective, and that's really what you heard Adam and Jason talk about a few minutes ago. We did open up offices in the countries that I mentioned earlier. So we're now in France, in Spain, in Germany, in Chile. And then Colombia, Australia and Mexico will be coming up. My comment about not planting flags is that this is not about being everywhere. This is about being in places where we think our value proposition is going to be needed and where we can make a profit. So that's really what that comment is related to that. In order to be able business organically like we're doing, it is necessary to put the investment in people, talent, technology, et cetera. But all that cost is embedded in the combined ratio targets that we talked about today. So it's all part and parcel of all of that. And then maybe the last thing that I would highlight, Greg, is the fact that, as Mark pointed out, expense efficiency and expense management in this company to Hallmark. And you have seen our operating expense ratio for the group stay in a very consistent place over time. So we do understand how to make trade-offs, how to say no to certain things, how to say yes to the right things that we want to invest in. .

Great. And then the follow-up in some of the comments on the reinsurance business, there was a discussion about commission rates and lowering commission rates going forward. So I know this came up on the conference call, but maybe go back and revisit what you meant by that comment and what your view of Center going in to the 24 renewal seasons look like, et cetera?

I think both Jim and Jill can provide some color on that .

Yes. I'll give you a little high-level view and then let Jo come in. Look, I think what we meant was that commissions are going to go down. And we saw that begin really this year, particularly in casualty, but also in pro rata property. I think the need for those improvements is actually accelerating, and we have certainly seen indications that, that will come to fruition as we get into 1 124. But Jill, you want to weigh in? .

Yes. I think especially on the casualty side, we're seeing year development, we're seeing lengthening of development patterns. And so that causes us to want to create a better alignment of interest with our cedents. So we expect seating commissions to come down in the casualty space, in particular. .

Let's go to Meyer and then we'll do Mark on the left side, then we'll come back to Mike.

Okay. Two unrelated questions for both for Mark. I think...

Sorry, say your name and your firm.

Meyer Shields, KBW First question would be, Mark, in your comments, you talked about how 2/3 of the reserves are from essentially hard market years right now. Can you talk about your confidence in the reserves specifically for the soft market years, because we are seeing examples of adverse development, sometimes dangerous adverse development at some companies for that period.

Yes. The reserves, I don't think I mentioned these 2/3, but it certainly is a large position, but I'm pretty sure it's a little bit less than 3. So having said that, I think the social inflation is real. And it's pervasive in the industry. I think we've seen strong trends and that are continuing to worsen. The good thing is that I think we've got a very diverse portfolio of businesses and reserves for that matter, long tail, medium tail and short tail that will help us to absorb and navigate the puts and takes that come from any type of portfolio. And when you're as diversified as we are, you have more options to manage that kind of volatility. So I made the point earlier that we feel confident in our reserve position and that we'll be able to manage those as they develop over time.

Okay. And then second, on the investment portfolio, you talked about 23%, I think, of portfolio being floating rate. Is that too high given where we are now.

I don't think so. So we make a few points here. So first of all, why do we have them? They are very attractive securities that match well with the underlying reserves. So you got to remember, the first thing you're trying to do is make sure that you can pay out those reserves over time. You've got good credit quality, matching durations, cash flow streams that are commensurate with the liability profile, but you're also picking up very significant yield differentials versus a lower-rated corporate tenure bond, for example, at this point in the cycle. It could be as much as 200 bps on going into our third quarter earnings call was the number that we had. Now it doesn't mean that we're we wouldn't be looking to pivot or looking to add longer-dated fixed income maturities as rates start to peak. That's a trade that we've been doing in smaller increments throughout the time. So I don't see us getting larger than '23. I could certainly see that diminishing over time. But first and foremost, they represent a very good match in all respects against the reserves they're backing. .

Great. Thanks. Let's go to Mark first and I'll go to [indiscernible] next.

Mark Lane from William Blair, buy side. Your total shareholder return target. I'm not suggesting that it's -- that I don't agree with the way that you've characterized it. But it does suggest a certain preference for potential capital return options, depending on the valuation of the stock, for example, if you're buying back stock and your stock is at a premium to book, it's dilutive to your total shareholder return target. So as you -- as we start to evolve, is -- but is a special dividend an option at some particular point if things slow. And so how do you think about balancing shareholder return versus potentially -- I'm sorry, share repurchase versus potentially a special dividend or something like that because the way in which you characterize your TSR target, naturally leads you to a preference of 1 of those outcomes. .

Well, look, there's a lot of tools for capital management and how to deal with excess capital. And the Board ultimately signs off on those types of decisions, dividends, for example, and the buybacks. I think with -- and we're obviously privileging the use of capital now for organic growth for obvious reasons that we got into. I think on the buybacks we would look at the intrinsic value of the company when we try to consider whether we would deploy a buyback and how -- what that would remunerate relative to other opportunities. A special dividend I can't say it's off the table, but it's certainly in the hunt on our minds. I don't think we've done 1 to the best of my knowledge. We like having a regular quarterly dividend that's, that's an attractive feature of shareholder remuneration, and I could see that increasing commensurately over time, but not in any excessive fashion -- but that will be a nice problem to have if and when it arises.

Thanks. Let's go to Yaron in the middle here after Mike.

Yaron Kinar with Jefferies. I wanted to start with talking about premium to surplus. Maybe you can talk about what your expectations there are as you're looking at the targets that you set. And then maybe specifically, as reinsurance is an area that you're growing and really focused on with the premium to surplus essentially be coming down? And then over time, as you're maybe reemphasizing insurance growth, would we expect that to go up?

So it really depends on the mix of business. I think the better way to look at it is we're trying to build a very accretive margin rich portfolio of risks in our company. And so long tail lines, short-tail lines, Property Cat, they all have different abilities to leverage versus surplus. So the things that I would put forward as you look at our coming 3-year projection, I think one of the things you'll see is one of the points I made towards the end of my by monologues we want to become more of a growth underwriter where we keep more of what we underwrite. That's something that I think is going to become more prevalent in this 3-year plan versus the last one. We have meaningful excess capital. We're going to deploy that. We want to make sure that it's really respectful of the focus on margin as opposed to just getting volume and leveraging the capital effect. But I don't see I think the premium composition is really going to be more of a development based on how attractive those lines and those clients are where we can grow rather than trying to hit a certain metric ratio.

I would agree with Mark. If I can just build on that, Yaron. If you look at what we have done over the last 3 or 4 years is very effectively play the cycle, right? You have seen us lean in to, for example, the reinsurance hard market right now. Before that, you had seen us diversify into both casualty and property in a pretty significant way, and that's on the reinsurance side of things. . On the primary side, you've heard some of the examples from my colleagues where when we don't find that the product lines are generating the types of returns that we want to generate, easy enough for us to pivot, right? That's one of the wonderful things about this culture and this company is that we're nimble and we're diversified. So we can move away from public D&O. We can move away from workers' compensation. We can lean hard into property. We can grow into the specialty lines. And I think that's what you're going to see us doing in order to achieve these results. .

And my second question, beyond Property Cat, as you're looking to grow in the other property lines, both in insurance and reinsurance, how are you managing secondary perils non-weather perils, how are you maintaining the risk management of that property book?

Terrific. Yes. No, it's a great question. So first of all, 1 thing to always keep in mind is when we think about aggregation and capacity allocation, we do that at a group level, and it's done centrally. So all of our capital allocation activity is done at the group level. We have a robust risk management process, which includes very granular analytics and scorecarding around where we're getting best return. . And so the 2 divisions, I would say they're competing for capital, but we're always looking for where can we get paid better and we're going to push capital towards those areas. One of the aspects that we look at is to move beyond just core peak zone modeled cat risk in Southeast windstorm or quake or what have you, and think about things like thunderstorm, for example, or flooding, fire, et cetera. And 1 of the comments you would have heard me make in my presentation today was around the bespoke modeling we're able to do. And we leverage analytical capabilities like that to ensure that we're not laddering up too much exposure between our primary property business, reinsurance treaty, fac in any particular area. And it's not that we're afraid to take those exposures when we're getting paid appropriately. It's just ensuring that they're rightsized and that the returns make sense. So hopefully, it gives you a insight into how we do it. .

And if I can build on that for a second. One of the things that I mentioned in my presentation is the enterprise risk management framework that we created in this company over the last few years. And that's a perfect example of it, where we will deploy capital centrally but underwrite locally. So the reality is there's 3 of us or 4 of us up here that are the ones that make the decisions across the entire company of where we're going to deploy that capacity. And we make that decision based on the best risk-adjusted return that we can get. And we do compete against capacity in a particular country in a particular line in a particular region where we may find in some places, it is better to deploy to reinsurance to insurance and another region may be the opposite. And so this is essentially how we look at this in a very holistic way. .

Great. Thanks, Yaron. We'll go to Ryan next, can go to Alex down here. .

Ryan Tunis, Autonomous Research. A couple for Jim. First one, top of the list for your levers to improvement in reinsurance was casualty cycle management. I guess I'm just curious what you mean by that. Obviously, casualty has a higher underlying combined ratio. Curious if you just foresee that being a smaller part of the mix? Or are there pockets of that business that you see is underperforming today that need to be remediated .

Sure, Ryan. Thanks for the question. I always appreciate your questions. Look, I think about it a couple of ways. One, and I talked about this when I mentioned things like D&O, which we -- our workers' comp, which are also casualty lines, there are clearly aspects of casualty and commercial auto liability might be another 1 where conditions are more difficult than in our core casualty portfolio, which is a general liability and excess portfolio that's performing really, really well. . And so we're always dynamically managing our mix that way. My comment about managing the cycle is we have done a really great job of growing into a hard market. And you saw our -- within reinsurance, our treaty casualty, our Bermuda Casualty businesses really growing when we got to 2020, '21, '22 with pricing, terms conditions improving, et cetera. And that was very well timed, and we took tremendous advantage of it. You have to be as thoughtful when maybe conditions are getting a little tougher. And so what we're alive to is the idea that between social inflation and the fact that rates are now more aligned with loss trend as opposed to significantly above loss trend, we just have to be very, very thoughtful. But what it does mean for us is it always comes back to individual deal underwriting. So when Jill and her team are evaluating deals, it's about the deal. It's not about some macro thought about where the casualty market might be going. We're looking at what does the seed and have to offer us in terms of the composition of the book. their pricing strategy, their underwriting strategy, where is the ceding commission going to be? And we manage that very, very aggressively. And so when I talk about managing the casualty cycle, it's not losing sight of that discipline as we move forward.

Ryan, if I can build on that for just a second as well. Keep in mind that unlike some of our competitors, we have not underwritten the market on the casualty side. We've underwritten specific cedents that we believe shape shared interest, we understand their underwriting. And I think that builds on Jim's point that we're pretty focused on what we're doing. But we're also not shy to move away should we see an inflection point.

Got it. And then a follow-up, I guess, on the property cat side. Earlier in the year, there was some discussion about how there's a lag in I guess the 1/1 renewal would earn in -- is it safe to say, I guess, looking back at third quarter results, is that a pretty accurate baseline in terms of how we should think about all the I guess, better underwriting you've had in 2023, 6/1 on 1/1, et cetera. Is that a good baseline? Or is there still more to earn in on a lag in some of the quota shares?

Yes. So if you think about an earnings pattern on a [ 1/1 '23] treaty, we're getting into the point where you're seeing sort of the peak of that earnings process, whether it's fourth quarter, first quarter, et cetera. And so we do see our casualty mix staying pretty robust, and we would have seen that in our third quarter results despite the fact that we are shifting the written portfolio toward property cat, which is why we think there's a tailwind in some of the results you've seen from us, which have been very strong. There's still a tailwind in terms of the mix impact because obviously, casualty runs at a higher attritional loss ratio we'll continue to benefit from the way we've evolved the written mix. .

Let's go to Alex. .

It's Alex Scott, Goldman Sachs. First question I had was on the international insurance growth strategy. I just wanted to better understand the loss ratio or the combined ratios that you're projecting. I thought they were pretty bold and they seem to imply further margin improvement despite a growth strategy comes with business building out new distribution partners, maybe using a little more third-party data and new geographies, et cetera. What are the things that I'm missing that overwhelm that and allow you [indiscernible] margin?

Sure, Alex. Let me start, and I'll ask Adam and Jason to jump into that as well. Part of it is mix of business as well, right? When you think about what's available in the international market, particularly in emerging markets, but also largely true in the Continental Europe and in the U.K.. It's primarily more oriented towards the first-party lines that Jason was talking about. So the property, inland marine, et cetera, et cetera. Those lines of business tend to have loss fix loss ratios that are lower than the long tail lines. . So if you think about an average long-tail line having a 65, 66 loss pick, these are going to be closer to the 58, 59, et cetera, et cetera. So as you're right and you grow these businesses overseas, there is going to be, by definition, a lower mix of your loss ratio and hence, that helps to adjust with all of that. The other thing to keep in mind, which I think is very important is the fact that we're not starting from 0, right? We already have about 15% of our business before we started this about 2 years ago, that was part of the international component of the Insurance division. As Jason pointed out, most of that was really London wholesale business, and we're shifting away London is still a part of it, but the majority of this is this retail strategy that I just spoke about that carry some of these loss ratios. And a lot of it is just good underwriting. And that's really what I'd like for Adam and Jason to talk to you about. .

Yes. Thanks, Juan. I mean I think that's right. I mean really -- when we think about the growth and the expansion, it really is that retail lens and like Mike in North America, having that retail and wholesale blend, it's also been a bit more intentional around the actual products we want to write and where we want to write them. And as I mentioned in my bit, what we're seeing as our retail strategy grows, is a reduction in our acquisition costs, and that also translates to our loss ratios. And having that balance between first party and third party that portfolio mix is really something that over the last couple of years since we joined the organization, we've really worked to try and develop. And I think recognizing the geographic expansion, those markets that we're in currently, we recognize how they trade and at what kind of loss ratios, not just by the industry and the client segment, but also by the acquisition costs charged by the broking partners we deal with.

Maybe for a follow-up. I noticed on one of the slides that was highlighting credit and political risk is an attractive market. I think it was CNA that might have exited that business recently. It seems like it was maybe a differentiated take just given the global environment right now. So it is interested in what you see the opportunity there?

[indiscernible] Mike you want to address that.

I didn't hear -- do you say the what about -- I just...

Credit and political risk [indiscernible]

What, as far as the opportunity Yes, sure. So we have -- it's 1 of our global products that we actually trade in 3 different regions: North America, Europe and then through Asia. And it's run by a team that's been with us for over 7 years. We've seen that not just produce meaningful combined ratios, but that market actually post COVID has picked up, just given the environment. We're seeing more investment being made and more opportunities around the globe, mainly for mostly infrastructure stuff. We tend to do a lot with the multinationals and others. We have a really good relationship with a lot of the key bigger multilaterals that have a lot of the investments that they're making in a lot of the third world. So that would be 1 aspect. The other is just the ability of just the amount of credit, a lot of the lending that has occurred over the last few years has opened up a lot in the marketplace all over different places. But we continue to view that as a really viable market for us and a specialty advantage that we have with our expertise and talent that we have. .

It's a business that we like, Alex. It runs at a terrific combined ratio and there's significant opportunity out there for us. Jim talked about it also on the reinsurance side of things. That's a place where we also have real skill there.

We'll go to Mike.

Mike Zaremski, BMO. One, you made remarks saying that in terms of that 89 to 91 target, I think, over time, maybe towards the later years get towards the lower end of the range towards -- more down towards 89% over time. Any color you'd like to add more? Is that more a reinsurance comment, more primary insurance segment comment or just any elaboration on that?

Yes. Thanks, Mike. And I think it was Jim that may have said that in the context of the reinsurance division. But I think a lot of it has to do with -- similar to the question that ones was just asking. It's really about mix of business, more so than anything else as you start seeing us lean into as we have into the reinsurance heart market over the last 12, 18 months or so, that will change the mix of business as we've talked publicly before in some of our earnings calls, we finished last year, roughly 52% casualty 48% property. That will start shifting. And as that begins to shift because property does carry lower attritional loss ratios, you will start seeing the mixing of that as well. The other component of that is commissions, right? You've heard Jill and Jim talked about seat commissions. We expect them to come down as we go through this year and next. That will also have a beneficial impact to all of that as well. So I think it's a bit of those 2 things. .

My follow-up is on the reinsurance segment. You've talked about being able to get on to programs of smaller cedents that will benefit your loss ratio? Is -- maybe you can elaborate on that comment? Do these companies just have a history of a better loss ratio and it just you had to kind of wait in line and because of the market dislocation, got in? Or how big of this new client portfolio is this as a percentage of the entire.

Yes. Yes. No, it's a great question. And it's really a phenomenon in Europe where, particularly in Central Europe, you have these companies with these incredibly long histories of serving very targeted groups of clients, they generate very consistent returns, very attractive returns, and they're very consistent reinsurance buyers, which means their panels don't change very frequently. And these relationships go back a long time. So you can't just show up 1 day and say I want to be on your panel. You've got to have a strong relationship for a long period of time and then wait for the right moment, and that moment was presented to us when a lot of our competitors were screwing up the 1/1 '23 renewal, that's when our opportunity emerged, and we took it. And they're just -- they're just very high-quality, well-run companies that like to make sure that their reinsurers make a consistent return, which is a nice thing to have in your portfolio.

And if I can add to that, this also ties back to the talent piece. So Jim described the structure. You mentioned an individual by Artur Klinger, who's Jill's counterpart running international on the reinsurance side of things, very well respected in Europe. And so when the opportunity came up when some of our competitors did the footfalls at the beginning of the year, the relationships have already been established with Art to enable us to be able to come into some of those programs. These tend to be mostly in peripheral Europe, so outside of the major economies in non-cat areas, which is terrific for us. and they turn to be very profitable mutual type companies. And so for us, this -- when we talk about deploying some of the capital that we raised in May to new clients, that's a great example of some of the type of clients that we're deploying to now. .

We'll go to you next.

Mike Ward with Citi. I was curious about for primary insurance specifically, the underlying combined ratio has been a little volatile in recent years. So just curious about what gives you confidence in that margin target? I know you mentioned mix a couple of times, are there other components that are enforcing your confidence on those margins?

Yes. So let me start, and then I'll ask Mike Karm and Mike Mulray to jump in as well. I think it begins with a lot of what we talked about today, whether it's portfolio management, which really means getting very granular into each of your businesses, understanding what's working, what's not working and then taking action. So I think that's a big part of that. The other part of it is cycle management, which is related to it, and that's more of a timing thing. It's understanding, for instance, that public D&O right now is not in a good place because there is too much new business being chased by too little -- by too much capital rather. So pricing is coming down so we can pull away from that because we're pretty well diversified. So those are 2 examples of that. And I also mentioned essentially the tools that we created that gives us an ability to look at every portfolio, every region of the world, every market and look for opportunities and challenges and then act upon that. That's how we manage the portfolio. It's really with that level of granularity. So when we look at the underlying numbers that basically are underneath the combined ratio targets that we just talked to you about, that's really what's been able to drive, is being able to proactively shape the portfolio to the more attractive lines where we can get better rate, more adequacy, et cetera, et cetera. That's how we get there. But Mike, I don't know...

Yes, I would just add, I guess, just to follow up on my comments in my presentation. Besides the portfolio and the cycle management, the focus on us around as we scale our businesses, getting the utility out of the efficiencies, particularly in one of the things we're doing in technology, many other pieces on just the claim focus, which is another big piece. But we've invested meaningfully to develop our claim ability to not only big things in-house, but actually control and bringing that overall loss ratio has a huge impact. So it's a combination of all the 3 things you're talking about that will continue to distribute our benefit.

And then, I guess, top line sort of targets over the next couple of years. Curious if there's like a cadence built into the plan. Any kind of quantification or a discussion we can have into this year or like a cadence over the next couple of years for reinsurance and primary.

Sure. Look, we feel very confident about our ability to grow this company. And if you look at our track record over the last 4 years or so, it's there. We identify the opportunities. We are aggressive into it. When we get paid for it, we're going to grow. And that's essentially who we are. We talked about a lot of opportunities today. We talked about opportunities in reinsurance in the primary side in international, et cetera. So we feel very good about our ability to continue growing this company profitably. More importantly though, however, it's the bottom line, and it's the margin expansion. And this is where we talk about the greater than 17% total shareholder return over that period of time. And the improvement in the combined ratios that you see from our last plan, that's really the focus. So very confident in growing this company, a lot of opportunity everywhere, very well-diversified, region line distribution, not a problem. A lot of focus on the bottom line, a lot of focus on returning money to you and to our investors. .

Elyse, let's go to Andy next.

Andrew V. Vindigni, General American. So when you look at your internal data on focusing on property non-cat business, do you think you have a lot of room to continue to write a lot of that business and keep your volatility low, I guess, from a horizontal or frequency standpoint to what I don't know how you look at it, but it seems like that's where there's a potential opportunity.

So let me start, and I'll ask Jim to add a little bit of color on that. For us, again, it goes back to -- from an enterprise risk management framework, how we look at the company and how we manage exposure aggregations across reinsurance and insurance. Your question specifically on not camp property is great because the pricing has gotten quite strong in that area. If you heard our calls a year ago, 18 months ago, we were moving away from a lot of the property pro ratas and really favoring the property XOLs. We still like the property XOLs, particularly on the catastrophe side, but we're starting to find that the pricing on the pro ratas is getting to a very adequate place and starting to become more interesting to us. So when we think about what we're writing and what we're growing, that's a part of that as well. But I think Jim can add a little bit more granularity.

Yes. I think that nails it. Look, we were probably a year ago thinking about pro rata as -- if you think about the chart I put up with colors, it was more of a greenish yellow, presented some challenges. It brought at the time, a little bit more volatility. As Juan said, with pricing improvements with really good event level caps, et cetera, it's getting more attractive. But we're talking about a subtle shift in mix. It's becoming more attractive. We're picking our spots as we do in all of our portfolios, partnering with best-in-class underwriters, making sure that seating commissions make sense, et cetera and that opens up some incremental opportunity for us. But it doesn't fundamentally change the risk strategy that we've been describing over the last couple of years or any of the charts that I shared with you today. .

So if you look at your earnings yield on your stock, right? It's on next year's Street consensus estimates, it's about 15% after tax. And that's roughly 2.5x our new money yield, right? And you probably have 15% of your investment portfolio equity-related investments. So why wouldn't you like consider your stock as part of that equity-related investments it seems like you guys delivered really well the last 3 years, and your relative valuation really hasn't changed a whole lot. And there are a lot of your other competitors that sell that have similar returns same volatility, so at much higher valuations or buying their stock on a consistent basis.

Well, look, first of all, I don't think we're a 15% ROE company I think we have a lot of opportunities to exceed our total shareholder return objective that we outlined today in a meaningful fashion and grow franchise, especially when you think about it on the underwriting side for both insurance and reinsurance, and that's a long-term value creation benefit buying back stock dividends. We've done them in the past. We'll do them in the future, and it's at the present time, given where the market is and the opportunities it's secondary in terms of our options to create value for shareholders. But as I mentioned, I would say almost repeatedly in my monologue, lots of ways to outperform. It doesn't matter investments, fixed income total return portfolio, both franchises, I think, on the insurance side and the reinsurance side, especially have tremendous opportunities in front of us. We've got the ability to further optimize our capital structure and stack our hedging -- there's just a lot of ways to create even more value for 2024 and beyond. So let's see how we do before we get into that discussion. .

Thanks, we'll go to Elyse.

Elyse Greenspan, Wells Fargo. So my question, Jim, when you gave your prepared remarks, you said you expect the property hard market to resist into 2025. In response to a question you were pointing to a casualty versus property split in reinsurance of 52% versus 48%. And do you expect that to shift to property? Over the 3-year plan, how do you envision the mix shift of...

Yes. I mean I think over that 3-year period, we would expect the mix to shift continuously as we go through that. I think what I would point out though is when we talk about the relative performance of Property and Casualty, 1 thing to keep in mind is we have as 1 indicated partnered with best-in-class cedents. We don't write the entire market. I think we do it from a very advantaged position in terms of where Everest sits with our clients and their priority list of which reinsurers they want to partner with. . All of that means that even if casualty conditions get challenging, that doesn't mean there's not going to be opportunity. We think there will be meaningful opportunity. And so we're not talking about a dramatic step change in the mix. It's going to be more of a, I think, more of a subtle move over time that will allow some of the tailwinds around the lower attritional combined ratio property to show through and really drive us, as I had indicated into the lower end of the combined ratio range that I mentioned.

Then I talked about insurance as an avenue of growth, and that's something you've mentioned consistently on your calls. This is a 3-year plan, and I know as mentioned, you can get where you need to get organically. I'm assuming M&A doesn't -- is not on top of list over the next 3, [ 4 years. ]

Thanks, Elyse. M&A would have a high bar for us. We're particularly focused on an organic strategy is really what we have been building out over the last number of years. Well, obviously, we keep our eyes open. If there's a strategic acquisition that is accretive to the company that gives us an advantage in technology or in people or in a particular product line or in a particular geography, we will look at it. But as I said, it would have a high bar because I bet on my underwriters any day. It's much better, particularly in the market that we're in right now, where you have a tailwind on both the reinsurance and the insurance side, to just let them go do what they do and generate the results that they've been generating over the last few years, but it's certainly something that we will keep in the toolkit. .

Yaron, next.

Yaron Kinar with Jefferies with a follow-up probably for Mike and Mike. In one of the slides, it seems like GL was an area that you were constructive on. And I was just curious -- my understanding is that it's a line that's coming under a little bit of stress right now. So what makes you so constructive about GL for the next 3 years? .

Yes. So thanks for the question, Yaron. Right now, GL is starting to see the rate -- started seeing some rate back in 2019 tapered off a little bit, but we're seeing an uptick back in rate. And then for us, it's a low limit line size. So we can certainly manage that. Whereas other lines, you've got much more capacity. So that's what gives us some of the confidence that we're seeing. That market is starting to turn.

What I would add to that, though, is we keep an eye on it. Similar to what Jim said about reinsurance, what I said about reinsurance and casualty we're very watchful of that line of business. Now we're encouraged because the last couple of quarters, we have seen rates increase at the same time. But we do manage it carefully, whether it's through limits or through risk profiles, et cetera, we are monitoring that line quite closely. .

Go to Meyer then Mike.

Meyer Shields, KBW. I want to center in on one point that you mentioned in the slides. You talked about public D&O and workers' compensation, facing challenges, and therefore, representing a smaller part of the portfolio. To the extent that you're in those lines now, is that because you've identified pockets of profitability? Or is this just willing to accept pressured results for long-term relationships.

It's more like we found pockets. I mean sometimes those 2 lines come packaged in mainframe casualty treaties. And so you get a small percentage of it as well. but they are very tiny parts of our portfolio. I mean, low single-digit percentages. Workers' comp is probably -- I think it's less than that. It's probably not even a full point of our total share. .

Yes, let's got a Mike next then, Bob.

Mike from BMO. Does the guidance contemplate any changes to the tax regimes?

It does. So even though it's not formal, I think the global minimum tax that's been floating around with respect to Bermuda would be the main factor for Everest. We're still waiting for what those formal guidelines will be. But I think you can anticipate something like a 15% income tax rate beginning January 1, 2025. And there are other parts that need to be further defined with respect to offsets, but that's something that we contemplated in our plan. So I think we've been prudent and conservative in that respect. And even if it does come to pass, we still very much like doing business in Bermuda, and I don't see that part changing.

Yes. And I think that's the key point, Mike. I think we're being prudent in our assumptions because the fact is we don't know yet because the Bermudan government hasn't come out and said exactly what they're going to do, either from the tax rate or an offset standpoint. .

My first question is around.

Bob, name and firm, please.

Bob Huang, Morgan Stanley. My first question is on reserving. You mentioned, obviously, best estimate plus margin -- is it possible to maybe break that down a little bit further, specifically in terms of property line, and casualty line? How should we think also about the loss cost trend going forward for both of those.

Well, look, we diversified portfolio of reserves. So you can have long tail lines that are producing very nice margins. I mean we showed that last year, for example, workers' comp on the primary side had a very healthy margin, you've clearly got social inflation pressure on some of those 16 to 19 lines. You've got tremendous margins, I would say, in some of the more recent property lines. There's also specialty lines that are producing very nicely as well. We've talked about a few surety, fidelity political risk, trade credit, et cetera. So it's nice to have this first, underwriting focus on margin and seeing not develop over time as reserves season and then having a diversified geographically and then by line as well, because you're going to get volatility, we're paid as an industry to take risk. And so that can manifest itself in different aspects, and I was hinting at social and economic inflation in my discussion. But -- so I would say it's -- we've got a broadly diversified portfolio with good embedded margin, and we feel confident.

Right. My follow-up, if we were to look at kind of workers' comp. Obviously, CPI numbers just came out. Just curious your view on how medical inflation recently could have an impact on that trend going forward? Is that align where you deemphasized because of the lack of profitability? Or is it -- can you maybe help us think about the workers' comp business as a whole?

Yes, Bob, particularly when we think about workers' compensation and specifically monoline workers' compensation, I think as Mike Karmilowicz said in his presentation, we used to be about 20% plus of the book about 4 years ago. It's now roughly less than 10%, closer to probably 5%. A lot of it has been because the pricing has just not been there, right? The reality is pricing has been negative in workers' compensation over the last number of years. and it doesn't look like it's going to be firming. So we have lots of choices as to where we put our capital, where do we want to get the best economic return out of this. And that's 1 of the reasons why you see us move away from that line of business, even though we have a lot of expertise, but there's other lines of business that have a much better return profile, and hence, we go after that. To your medical inflation point, keep in mind that fee schedules govern sort of the treatment on the workers' compensation. And as a result of that, fee schedules have not been adapted in a significant way, even though the inflationary period that we just lived through. So while there will be some embedded inflation that comes through there, it's mitigated by the fee schedules, but for us specifically, it's really about pricing more so than anything else. .

We got time for 1 or 2 more here. Anybody else? Everyone was get the reception apparently. All right. Ladies gene given another pause for our leadership team. Thank you. We'll head to some [indiscernible] this .

Thank you very much for your support and for your time with us today. All right.