Everest Group Q3 2026: $268M reserve charge and $322M of cat losses push combined ratio to 107%

Everest Group earned $233 million ($6.12 per diluted share) in the third quarter of 2026, down 8.6% from $255 million ($6.09) a year earlier. Two charges did the damage. Catastrophe losses rose to $322 million from $50 million, led by the Colombia earthquake and events in the Middle East. The company also added $268 million to its estimates for claims from earlier years, almost all of it in casualty reinsurance. The insurance business lost $223 million before investment income. A 17.4% jump in investment income, to $634 million, kept the quarter profitable, and buybacks kept per-share earnings level.

These figures come from the earnings release (8-K Exhibit 99.1, filed October 28, 2026). The full 10-Q has not been filed yet, so the reserve detail by line of business and accident year is not available yet.

Key metrics

*Company non-GAAP measures. "Attritional" strips out catastrophes and prior-year reserve changes to show the underlying year's claims. Net operating income excludes investment gains and losses, foreign-exchange results, restructuring and divestiture costs, and effects of the adverse development cover.

Takeaway: Underneath, the current year's business is improving: the attritional combined ratio fell 1.2 points to 88.4%. The problem is old casualty business. Everest strengthened casualty reserves in Q3 2025, again in Q2 2026 and again this quarter, so investors should not treat these charges as one-off when valuing the company. Buybacks are hiding the cost in per-share figures: net income fell 8.6% while EPS rose 0.5%.

What the ratios say

The combined ratio is claims plus underwriting expenses as a share of premiums earned. Below 100% means the insurance business made money on its own. Above 100% means it lost money and depends on investment income. The loss ratio is the claims part alone: 77.0% this quarter. It breaks down into 58.0 points of current-year claims (down from 59.9), 10.5 points of catastrophes (up from 1.3) and 8.5 points of prior-year reserve increases (down from 12.4).

The current-year business improved. With catastrophes and reserve changes removed, the attritional combined ratio fell 1.2 points to 88.4%. The 107.1% headline comes from the two one-off-looking items. One of them, reserve strengthening, has now shown up in Q3 2025, Q2 2026 and Q3 2026.

Reinsurance Treaty: casualty reserves again

Reinsurance Treaty is Everest's core business: insuring other insurers. Its combined ratio was 108.5%, against 87.0% a year earlier, and it lost $191 million on underwriting, against a $335 million profit. Three things drove that:

• Reserves. Net adverse prior-year development was $253 million, or 11.3 points of the ratio, against $16 million favorable a year ago. The release says this includes "gross casualty reserve strengthening of approximately $600 million, on top of the over $200 million of reserve strengthening in 2Q26." The gap between the $600 million gross figure and the $253 million net figure implies roughly $350 million of favorable development elsewhere. The release does not say where; the 10-Q should.
• Catastrophes. $277 million, net of reinsurance recoveries and reinstatement premiums (the extra premium a client pays to restore its cover after a claim). The release names "the Colombia Earthquake and events in the Middle East, as well as a number of weather-related losses globally". The prior-year quarter had $43 million.
• Shrinking on purpose. Gross written premium fell 6.2% on a comparable basis (constant currency, excluding reinstatement premiums) to about $2.7 billion. Casualty excess-of-loss fell 24.8%, casualty pro-rata 15.8% and property 1.8%. Net written premium fell faster, down 15.1%, because more of the business is passed on to reinsurers. Prepaid reinsurance premiums on the balance sheet rose to $871 million from $653 million at year-end.

Under the charges, the segment's attritional loss ratio improved 0.5 points to 56.3%, and its attritional combined ratio improved 1.1 points to 84.9%.

Global Wholesale & Specialty: growing, not yet profitable enough

This is the insurance business Everest is keeping. Gross written premium rose 3.3% to $948 million. Financial lines grew 27.5%, specialty 21.5% and casualty 19.7%, while facultative (reinsurance placed one risk at a time) fell 21.4% and property 6.0%. The attritional loss ratio improved 0.9 points to 60.0%. Expenses took more than that gain: the expense ratio rose 1.2 points to 33.7% "due to mix and lower earned premium". The combined ratio worsened to 97.3% from 95.5%, and underwriting income fell to $19 million from $33 million.

Legacy: much smaller losses

Legacy holds the commercial retail insurance book whose renewal rights Everest sold, plus older run-off business. It lost $51 million on underwriting, against $498 million a year earlier, when it took $486 million of reserve charges. This quarter's prior-year development was $14 million, which the release attributes to "two mid-sized property losses", and none of it fell to the adverse development cover. Earned premium fell to $208 million from $539 million as the book runs off. Net reserves before the cover were $5.88 billion, against $6.31 billion a year ago.

What the headline numbers hide

• Per-share growth came from buybacks. Pretax income was flat at $268 million against $269 million. Net income fell 8.6% because the tax rate rose to about 13.4% from 5.2% ($36 million of tax against $14 million). EPS still rose 0.5%, because diluted shares fell 9.2%. Everest bought back 1.27 million shares for $474 million in the quarter and $1.2 billion year to date, and paid $75 million in dividends.
• Investments, not insurance, earned the profit. Underwriting lost $223 million. Net investment income of $634 million, up $94 million and "driven by higher alternative investment returns", covered it. Returns on alternative investments such as private funds swing from quarter to quarter. Everest's own non-GAAP operating EPS of $7.62 is higher than GAAP because it adds back $51 million of after-tax investment losses, $18 million of restructuring and divestiture costs and a $12 million foreign-exchange loss. It does not exclude the reserve or catastrophe charges.
• Book value fell in the quarter. Book value per share was $381.04, up 4.0% on a year ago but down from $398.83 at June 30 (our Q2 report). The market value of the bond portfolio fell by $891 million after tax, which turned net income of $233 million into a comprehensive loss of $649 million. This is a paper loss that reverses if the bonds are held to maturity and paid in full. Excluding it, book value per share was $414.00, against $379.70 at year-end.
• Cash flow is shrinking with the book. Operating cash flow for the nine months was $1.61 billion, about 1.1 times net income of $1.45 billion, but down from $3.47 billion a year earlier. Unearned premiums fell $812 million as less business is written, reserves grew $1.25 billion against $3.09 billion, and taxes paid rose to $342 million from $98 million. This is the cash side of a company that is getting smaller, not a collection problem. Premiums receivable rose only slightly, to $5.83 billion from $5.73 billion at year-end.
• Both years carried big charges. Catastrophes plus adverse reserve development came to $590 million this quarter against $528 million a year ago, so the comparison is not unusually harsh or easy.

On balance the quarter is flattered: EPS edged up only because the share count fell 9.2%. Net income fell 8.6%, underwriting lost $223 million, and alternative-investment returns made up the difference.

Did last time's read hold up?

Mostly no. Our Q2 2026 report concluded that the profit decline was "not a new reserve problem: prior-year development netted to zero." The Q3 release now says Q2 included more than $200 million of reserve strengthening, offset elsewhere, and it adds about $600 million more. The other items we flagged went as follows:

• Shrinking revenue base: continued. Earned premium fell 18.1%.
• Hurricane season: the big catastrophe losses did come, but from an earthquake and Middle East events rather than an Atlantic hurricane.
• Wholesale & Specialty margins: we said the segment needed a combined ratio well below 95%. It went the other way, to 97.3%.
• Legacy costs after the AIG transition credits: the release says nothing about them. Legacy's other underwriting expenses were $46 million, against $105 million a year ago.

Outlook

The release gives no numerical guidance. CEO Jim Williamson said the treaty team is "navigating the market cycle with the highest level of discipline" and that "share repurchases remain a top priority." Our read:

• Reserves are the open question. About $800 million of gross casualty strengthening across two quarters, on top of the 2025 charges, makes the 10-Q's split by accident year and line the most important document Everest files this quarter. If the strengthening is concentrated in 2022–2024 excess casualty, which was the 2025 explanation, the steep casualty cuts are the right response. If it reaches newer years, it is not.
• The January 1 renewals. With casualty excess-of-loss already down a quarter and property pricing softening, net premium is likely to keep falling into 2027. Per-share results will depend on underwriting margins and buybacks.
• Capital versus book value. Buybacks of $1.2 billion so far this year roughly equal nine-month net income after dividends ($1.21 billion). If bond marks and reserve charges keep pulling book value per share down, that pace will be harder to sustain.