Everest Group (EG) 2026 年第三季法說會：準備金獲得強化，投資收益創新高

聖母峰集團（Everest Group Limited, EG）公布 2026 年第三季營業每股盈餘為 7.62 美元，受惠於常態性承保收益、創紀錄的淨投資收益以及股票回購。該季度亦包含大幅調增的責任險準備金，以及 3.02 億美元的稅前巨災損失。

重點總覽

• 稅後淨營業收益為每股 7.62 美元，剔除備供出售固定收益證券未實現損益後的每股淨值升至 414 美元。
• 核心業務的簽單保費總額為 37 億美元，在可比基礎上年減約 4%，主因聖母峰降低責任險風險敞口並優先考慮承保報酬率。
• 聖母峰報告了 2.68 億美元的淨不利前期準備金發展。合約再保險的責任險毛準備金調增約 6 億美元，主要針對 2022 年及以前的承保年度。
• 截至 9 月 30 日，在精算中央估計值及其上方安全邊際於本季均有所增加後，管理層估列的準備金比精算中央估計值高出超過 8.5 億美元。
• 淨投資收益達到創單季新高的 6.34 億美元，其中包括來自私募股權投資的 1.44 億美元。投資組合帳面殖利率上升至 4.6%，而新資金殖利率約為 5.1%。
• 返還股東的資本總額約為 5.5 億美元，其中包括 4.74 億美元的股票回購。今年以來累計資本返還已超過 14 億美元。

關鍵財務數據

業務與營運表現

合約再保險

合約再保險簽單保費總額為 27 億美元，在可比基礎上年減約 6%。責任險保費下降 18%，反映出美國責任險風險敞口減少，以及未達門檻報酬率之業務不續保或減保。

該部門的常態性損失率改善至 56.3%。其綜合成本率包含 11.3 個百分點的淨不利前期準備金發展以及 12.8 個百分點的巨災損失。稅前巨災損失總計 2.77 億美元，主要與哥倫比亞地震、中東事件以及歐洲與加拿大的較小損失有關。

聖母峰繼續在全球特種險與財務風險投資組合中尋找機會。管理層特別強調工程險、再生能源和指數型（parametric）保險產品等領域提供吸引人的風險調整後報酬。

全球批發與特種險

全球批發與特種險簽單保費總額年增逾 3%。國際保費在金融線、水險與特種險種帶動下呈雙位數成長，但部分被航空險抵銷。

綜合成本率為 97.3%。常態性損失率改善 90 個基點至 60%，反映出風險篩選、投資組合管理以及更佳的業務結構。稅前巨災損失為 2,500 萬美元，使綜合成本率增加了 3.5 個百分點。

管理層表示，成長仍保持精準鎖定而非全面推進。責任險的擴展集中於國際市場以及專業領域，如與資料中心和製造業相關的工程風險。

非核心既存業務

將商業零售保險續保權移轉給 AIG 的進度符合預期。既存業務部門對集團承保結果產生些微拖累，而負債繼續按計畫消化，平均存續期間約為三至四年。

來自 AIG 每季 3,000 萬美元的過渡期服務協議付款已於第三季末到期，這意味著該項相關進帳將不會在第四季重複出現。

管理層指引

• 管理層預計 2027 年 1 月 1 日的再保險續保將繼續保持競爭激烈，巨災業務面臨額外的費率壓力。聖母峰計劃在預期報酬率低於其門檻的地方降低參與度。
• 全球批發與特種險預計短期內的綜合成本率將落在 90% 中高段。
• 管理層繼續將每季 3 億美元的股票回購視為底線，並可能視資產負債表的健診程度與獲利能力提高該金額。
• 隨著聖母峰選擇性提高，淨可能最大損失 (PML) 可能會適度下降，不過管理層預計集團整體對巨災風險的偏好不會發生重大變化。
• 聖母峰預計在市場狀況大幅改善前，不會重建其責任險再保險投資組合。

風險與關注領域

責任險再保險仍是承保方面的首要疑慮。管理層提到美國的社會性通膨（social inflation）、法律體系濫用、競爭加劇以及居高不下的轉分保佣金，均對預期報酬率構成壓力。

財產巨災險的定價也競爭日趨激烈。儘管當前費率仍能產生吸引人的預期報酬，但管理層指出，隨著價格壓縮，更多再保計畫可能變得不再有利可圖。

儘管立場更趨保守，準備金的不確定性仍是關注焦點。聖母峰調升了精算中央估計值以及高於該估計值的邊際，同時保留了短尾險種大部分的有利發展。管理層警告，短期內無法保證會出現淨有利的準備金釋出。

巨災損失在各季度之間可能會有很大差異。管理層表示，不應以第三季的損失水準來推論未來會有更高的巨災負擔。

分析師問答重點

• 準備金檢視：管理層表示，本次檢視更新了預期損失率、發展因子、尾部因子及精算方法。除非有觀察到的數據支持，否則並未對近期承保動作或更快速的個案提存給予明確好處。
• 短尾險準備金：聖母峰刻意保留了大部分短尾險種的有利發展。管理層表示，短尾險種仍佔據高於精算中央估計值之準備金邊際的較大部分。
• 當前事故年：公司未對 2026 年預估損失率做出調整，因為設定時已更趨保守。管理層表示，準備金邊際的一小部分與 2026 承保年度相關。
• 責任險準備金結構：在問答環節討論到的 5.77 億美元責任險調增中，約三分之二與北美責任險相關，特別是傳統責任險比例再保險（Casualty Pro-Rata），並包含部分責任險超額賠款與專業責任險風險敞口。
• 資本與市場地位：管理層表示，在較弱市場中降低風險敞口不應損及聖母峰在價格改善時擴張的能力，理由是其主導市場的地位以及長期建立的分保公司關係。
• 潛在準備金交易：若不利發展保障（ADC）能提供實質的資本紓解，聖母峰會予以考慮，但管理層對目前的再保險準備金狀況表示有信心。

法說會逐字稿全文

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完整財報電話會議逐字稿

管理層陳述

Operator

Welcome to the Everest Group Limited Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Matthew Rohrmann, Senior Vice President, Head of Investor Relations. Please go ahead.

Matthew Rohrmann

Thank you, Drew. Good morning, everyone, and welcome to Everest Group Limited Third Quarter of 2026 Earnings Conference Call. The Everest executives leading today's call are Jim Williamson, President and CEO; and Elias Habayeb, Executive Vice President and CFO. We're also joined by other members of the Everest management team.

Before we begin, I'll preface the comments by noting that today's call will include forward-looking statements. Actual results may differ materially, and we undertake no obligation to publicly update forward-looking statements. Please note that forward-looking statements, including estimates, projections and forecasts of future results are subject to the risks, uncertainties and assumptions noted in Everest's SEC filings.

Management will also be referring to certain non-GAAP financial measures. Available explanations and reconciliations to GAAP can be found in the earnings release, investor presentation and financial supplement on our Investor Relations website.

And with that, I'll turn the call over to Jim.

James Williamson

Thanks, Matt. Good morning, everyone. Everest has generated a year-to-date annualized total shareholder return of 14.2%, while executing on several initiatives focused on generating shareholder value and positioning the company for its next chapter. I've said that Everest would do whatever was necessary to ensure the strength and sustainability of our balance sheet. This quarter, we prudently strengthened our Casualty reserves and reinsurance while not taking full credit for favorable development in short-tail lines. As a result, our reserve position is now over $850 million above our more conservative actuarial central estimates, further demonstrating this commitment.

Our annual long-tail reserve studies were more robust than ever. Both Elias and Katy Bradica, our new Group Chief Actuary, materially enhanced our reserving process, applying more conservative assumptions while giving little to no credit for the significant underwriting actions we've taken unless clearly evident in our data. Elias will provide more details.

Moving on to third quarter results. Our strategy is centered around strengthening our core underwriting businesses while managing the cycle with relentless discipline. Operating earnings per share of $7.62 were driven by disciplined attritional underwriting across our core businesses, record net investment income and accelerated capital return.

Our core businesses delivered $3.7 billion in gross written premium, a modest year-over-year decrease, reflecting our disciplined approach. As I've said, prioritizing bottom line results over top line production is imperative, especially when we're seeing more signs of irresponsible behavior in the market. Over the past several years, we have significantly repositioned the Casualty portfolios across both core businesses, balanced our mix and improved risk quality. We prudently raised our Casualty loss picks at the beginning of this year. Coupled with the significant underwriting actions we've implemented, our current accident year loss picks remain conservative.

Now turning to the segments. Our Reinsurance Treaty team continues to do an excellent job managing the cycle across all markets. We continue to decrease our exposure to U.S. casualty lines and selectively reduce business where rates were not adequate. This resulted in about a 6% decrease in gross written premium year-over-year on a constant dollar basis and excluding reinstatement premiums. Casualty lines were down by 18%, while property premiums decreased slightly as growth in Property Pro-Rata was offset by decreases in our cat and non-cat XOL portfolios.

We continue to see growth opportunities in our global specialty and financial risk portfolios where risk-adjusted returns remain attractive. Growth in the quarter was led by the Global specialty lines. The increase in the combined ratio in the quarter largely reflects the Casualty reserve strengthening I mentioned as well as pretax catastrophe losses of $277 million net of estimated recoveries and reinstatement premiums, primarily associated with the Colombia earthquake, events in the Middle East and a number of smaller European and Canadian losses. At the same time, the underlying portfolio's performance remains solid, as evidenced by the attritional loss ratio improving to 56.3% in the quarter.

Looking ahead to the 1/1/27 renewals, we expect market conditions to remain competitive. Everest is well known in the industry as a top-tier lead market, sought after by high-quality cedents looking for long-standing partnerships. Despite expected competition, we continue to see opportunities for attractive capital deployment. That said, we remain disciplined. Where deals don't meet our return thresholds, we'll adjust our participation accordingly.

Turning to the Global Wholesale & Specialty segment, which delivered another solid performance. Despite rate headwinds in short-tail lines, our strategy to expand the portfolio in specialty lines and targeted international markets remains consistent, while continuing to deliver margin expansion. Gross written premium increased over 3% year-over-year. We grew double digits internationally with broad-based growth across financial lines, marine and a number of specialty classes, partially offset by aviation.

While rate across our portfolio increased modestly, it continues to vary by line. More importantly, the areas of our business we are expanding are rate adequate. The attritional loss ratio improved 90 basis points year-over-year to 60%. This is a result of the team's disciplined risk selection and portfolio management, driving improved loss experience.

The combined ratio was 97.3%, prudently positioned at the high end of our expected range in the mid to high 90s for the full year. This included pretax catastrophe losses of $25 million net of estimated recoveries, primarily resulting from the Colombia earthquake and midsized losses in the Middle East.

Now a word on capital management. We accelerated capital return to shareholders to approximately $550 million in the quarter inclusive of dividends, bringing the year-to-date total to over $1.4 billion. Share repurchases continue to be a top priority for capital deployment as we approach year-end and head into 2027.

Over the last 2 years, we have transformed Everest. As we move forward, I couldn't be more optimistic in the strategy we're executing across our core businesses as Everest embarks on its next chapter, one that I believe will consistently generate value for shareholders led by disciplined underwriting, proactive capital management and balance sheet strength.

And with that, I'll turn the call over to Elias.

Elias Habayeb

Thank you, Jim, and good morning, everyone. The third quarter financial results reflects our continued focused execution on our strategic priorities. We grew book value per share, excluding unrealized gains and losses on the available-for-sale fixed maturity portfolio to $414, which grew both on a year-over-year basis as well as sequentially. This is despite higher cat losses and reserve strengthening in our Reinsurance business.

Before unpacking this quarter's results, let me first touch on reserves. First, as Jim said, Katy and I performed in-depth reviews of all material reserve studies for the quarter, which included all material long-tail lines. Second, we followed a very robust process. We thoroughly vetted and refreshed all material actuarial assumptions and methodologies with added conservatism.

This included expected loss ratios and loss development factors across all years. And we responded more promptly to credible emerging trends. We improved line of business segmentation within our reserve studies to better reflect performance and mix. While we've taken meaningful underwriting actions in recent years, we did not make any adjustments for these actions unless definitively evident in the data.

While there's evidence of accelerated case reserving in Casualty based on our enhanced claims analytics, we did not make any adjustments for this deliberate action in our core businesses. As I stated last quarter, our philosophy is to book our reserves at management's best estimates, which we expect to be above the actuarial central estimates. The actions we've taken this quarter have moved our reserves to a more conservative position and have meaningfully increased the differential between management's best estimates over the actuarial central estimates.

This differential increased to over $850 million as of September 30. This further strengthens our balance sheet as well as reduces the potential for future reserve volatility.

Now turning to the reserve movements in the quarter. We reported overall net unfavorable development of $268 million, driven largely by Casualty Reinsurance reserve strengthening. While loss emergence in short-tail lines continues to be favorable, we held back the majority of the favorable development as we look to enhance our conservative position.

In Reinsurance Treaty, we strengthened gross Casualty reserves in the quarter by approximately $600 million, which is on top of the $200 million of strengthening in the second quarter in U.S. casualty. The vast majority of the development was in underwriting years 2022 and prior, where we added conservatism to each underwriting year. In addition, we also rolled that experience forward into the more recent underwriting years.

Turning to our Insurance businesses, the bifurcation of our reserve studies into separate studies for each of Global Wholesale & Specialty and Legacy resulted in de minimis net overall reserve movement with no meaningful change to reserves subject to the ADC. As a result, we continue to have approximately $1 billion of net limit remaining under the ADC.

More importantly, the reserve study confirmed our view that the underwriting actions we took over the past few years have been beneficial, and the Global Wholesale & Specialty business is performing as expected. Finally, the reserve studies resulted in no change to our 2026 loss picks as they were previously set more conservatively.

Now turning to the third quarter Group results. Everest generated after-tax net operating earnings per share of $7.62. This was largely driven by attritional underwriting income, record net investment income and strong share repurchases.

Moving to our core businesses. Gross written premiums were $3.7 billion, down approximately 4% on a comparable basis year-over-year, largely driven by our underwriting discipline in Casualty lines. The attritional loss ratio was 57.2%, a decrease versus the prior year, reflecting improved loss experience and mix. Pretax cat losses were $302 million net of estimated recoveries and reinstatement premiums in the quarter, largely driven by the events Jim mentioned. The expense ratio increased to 5.2%, largely reflecting the impact of lower net earned premium.

Now moving on to our Reinsurance Treaty business. Gross written premiums were $2.7 billion, down approximately 6% on a comparable basis year-over-year, largely driven by our underwriting discipline in Casualty lines, to a lesser extent to rate softening in property. The combined ratio included 11.3 points of net adverse prior year development and 12.8 points of cat losses. The attritional loss ratio improved to 56.3%, reflecting improved loss experience.

Now moving to our Global Wholesale & Specialty business where we're focused on improving underwriting margins as we pursue profitable growth in targeted lines and geographies. While the combined ratio increased to 97.3% due to cat losses, the attritional loss ratio improved by 90 basis points to 60% as a result of the underwriting actions we've been taking and an improving mix of business. Pretax cat losses net of estimated recoveries and reinstatement premiums contributed 3.5 points to the combined ratio, versus 80 basis points in the prior year quarter. The underwriting-related expense ratio increased to 12.6%, largely driven by lower earned premium volume. We continue to expect this business to deliver combined ratios in the mid to high 90s in the near term.

Now moving to our Legacy segment. We continue to manage the transition of our commercial retail insurance business to AIG, which remains on track. As expected, the segment generated a modest earnings drag on the group underwriting results in the third quarter. At the same time, we continue to proactively manage claims down as efficiently as possible.

Moving on to investments. Net investment income set a new quarterly record of $634 million. This was largely driven by strong performance from the private equity portfolio, which generated $144 million of income in the quarter. Overall, our book yield increased to 4.6% in the quarter, which is below our current new money yield of approximately 5.1%. The portfolio's average credit quality remains at AA-.

Turning to capital management. In the third quarter, we've repurchased approximately 1.3 million shares amounting to $474 million, at an average share price of $374 per share. Since the beginning of 2025, our share count has been reduced by approximately 13%. And when including our quarterly dividend, we returned approximately $550 million to shareholders this quarter. Over the last 4 quarters, our payout ratio has been approximately 92%. Looking ahead, while we continue to view share repurchases of $300 million as our quarterly floor, we expect to exceed that amount when appropriate given the strength of our balance sheet and earnings generation.

In summary, Everest continues to create momentum through the execution of our strategic objectives, of disciplined underwriting and proactive capital management, while taking the necessary steps to maintain a strong balance sheet.

And with that, I'll turn the call back over to Matt for Q&A.

Matthew Rohrmann

Thanks, Elias. Drew, we're now ready to open the line for questions. [Operator Instructions]

Operator

[Operator Instructions] The first question comes from Alex Scott with Barclays.

分析師問答

Taylor Scott

First, what I have for you is just -- for Elias. I'd be interested in if you could provide some additional commentary on your confidence in the process and really your confidence that you've got it to a place that would be more typical for this point in the cycle kind of coming out of a hard market maybe relative to industry peers. And if you think this can be a clearing event?

Elias Habayeb

Thanks, Alex. So listen, let me -- I'm going to answer it in 3 parts, your question. Part one is what did we try to accomplish with this reserve review. And our motivation was to increase the conservatism on the balance sheet and to position us to be able to bring more stability to our reserves going forward and reduce risk of further -- which is called reserve volatility. And I think we've accomplished that with the exercise we just went in.

Second, I'll talk about the process we did. And this was Katy and my first go-around since we've joined the company to go through it. And I think we went through a pretty robust and thorough process around it. We reviewed all the lines that were scheduled for the quarter, which includes all the major long-tail lines. And we went through all the key assumptions and we thoroughly vetted them, challenged them and refreshed them.

And that includes things like loss trends, loss development factors, tail factors, expected loss ratios as well as expanding the actuarial methodologies that are considered. We did increase the segmentation to get a more accurate view on performance and mix in the business, and we enhanced the claims analytics and the feedback loop relative to it. So with that, I think from a process perspective, we went through a pretty robust process this quarter.

The third element, on conservatism, and this also links to some of the things I said in the second quarter earnings call things we're considering. One is where we saw loss emergence in the older accident years. We didn't just react to it then. We kind of rolled it forward into the more recent accident years.

Second, there's been a lot of underwriting actions in the last few years. We do see it kind of emerging in the -- if you look at '26, but we decided, unless it's in the data, we didn't make any adjustments. So there was no explicit adjustments made for any of the underwriting actions. We'll wait until it emerges in the data before reflecting it.

Second, I would say, on -- we've done some work -- we've done work from a claims analytics perspective that shows evidence in the insurance side of the house about case reserve strengthening in Casualty. We see indications of it in the data from a number of our cedents. That being said, we did not make any adjustment for it in the reserving on our -- for our core businesses.

The other thing I would say is when you look at the short-tail line, there's been a significant amount of favorable loss emergence on the short-tail line. We released a smaller portion of it this quarter. The majority of the favorable emergence we're seeing on short-tail lines we held back.

And as a result of this work, I believe we've moved our actuarial central estimate up to a more conservative position from where it was before. At the same time, the differential between where we're booking our reserves and the actuarial central estimate, we also increased that differential, and it's over $850 million as of the end of September. And I think this is one of the highest it's been as far as I could tell at the company.

With respect to '26, that, we applied the same approach and judgments. We had the higher loss picks entering into this year. And we didn't see, given the emergence we're seeing and the results of the actuarial work, any need to make any changes to '26. '26 continues to be prudent.

Taylor Scott

That's all really helpful. Second question I had is as you're looking at 1/1 renewals, any commentary you can provide there? And is there any need for additional underwriting actions just coming away from all the work you've done?

James Williamson

Yes. Alex, look, obviously, it's a topic that's been widely discussed over the last few weeks. I mean our expectation on 1/1, and particularly as it relates to cat renewals and peak zones, is it will be another competitive renewal. You're looking at some additional rate decreases. Obviously, our view, as I've stated in prior calls, is that current rate levels continue to deliver a very strong expected return, and which is why we continue to deploy capital.

But as rates compress, more and more of the programs we look at will be -- will look a little less favorable. And we respond very quickly to that. And you saw that certainly in this quarter's results where our cat XOL written premium decreased in a reasonable way. And I wouldn't be surprised if we continue to get more selective as we go into '27.

Where we're really focused from an underwriting perspective is a few things. Number one, best-in-class cedents, and we've been very consistent on putting our capital to work with people that we think have a sort of differentiated expertise in what they're writing.

The second would be terms and conditions. I mean I know we like to talk about rate because it's easy to measure, but the most recent hard market delivered substantial improvements in terms and conditions. In many cases, for Everest, those happened in a nonconcurrent fashion. And we've been able to sustain those despite recent rate decreases. And our outlook is that we'll sustain the vast majority of that as we head into 2027. And then obviously, the work that we do around portfolio optimization and shifting capital from lower return to higher return opportunities.

You're going to see all that play out. I'm really confident that our Reinsurance team, notwithstanding some of the competitiveness we've seen, will deliver an excellent portfolio for us to enjoy in 2027.

Operator

The next question comes from Andrew Andersen with Jefferies.

Andrew Andersen

You had described the favorable, some short-term emergence, as significant, but you only released a small portion there. What prevents you from recognizing more of that favorability today?

Elias Habayeb

Andrew, it's Elias. We had the ability to release more of it. We chose not to. And that kind of ties to our objective of this reserve study is kind of increasing the conservative position on the balance sheet and to kind of position us to reduce future reserve volatility risk. So it was a management decision not to release more.

Andrew Andersen

Okay. And maybe bigger picture, with the book shrinking in several areas and market conditions becoming more competitive, how do you ensure the underwriting discipline today doesn't come at the expense of market relevance or your ability to reaccelerate growth over time?

James Williamson

Yes, sure. Look, we've proven over multiple cycles that we can effectively prune exposures when we think the economic terms available are below our standards, and then reaccelerate into the hard market. In fact, I would take you back to the 2023 hardening. In the year prior to that, we substantially cut our cat book. What allowed us to reaccelerate is core to Everest value proposition, which is we are an incredibly nimble organization. We're very lean. We have empowered leaders in each of the regions who have deep customer relationships. We tend to participate given our depth and breadth of expertise across many lines of business. We're a top-tier market. And we're welcomed on the reinsurance panels of all the lead market underwriters.

And I think that they will be more than willing to find more room for Everest when the time comes. And that's, frankly, when they'll need our capacity most. So we deliver a real service to our clients in that fashion. There's nothing about what we're doing now that even gets close to the idea of changing our relevance or the quality of our value proposition.

Operator

The next question comes from Meyer Shields with KBW.

Meyer Shields

For one, I guess, process question, Elias or Jim. Are you open to maybe updating the year-end global loss signals for the strengthening that you've done so far this year, so we can take a look at that maybe substantiate your confidence in the reserves?

Elias Habayeb

Meyer, it's Elias. We'll take it under consideration. Our process was to release it after we're done with all the reserves for the year. There's still some more studies in the fourth quarter, even though we covered all the material ones from a long-tail line perspective this quarter. We'll take it under consideration.

Meyer Shields

Okay. And then, Jim, just going back to 1/1. I was hoping you could talk about how the Casualty Reinsurance environment is looking from your perspective?

James Williamson

Yes, Meyer. Look, I think this is a frustratingly consistent message to what I've said over the last many number of calls. The fact is our view of Casualty Reinsurance is a fairly bearish one. And I would attribute to a number of things. One, the underlying environment remains very challenging. And that's driven by social inflation and legal system abuse in the U.S. The plaintiffs bar has not let up on their aggression in that space. And while there is some very encouraging signs that states are beginning to wake up to how destructive this process has been to the U.S. economy, it's still pretty limited. So the underlying environment isn't great.

Rate, while I think in a number of areas, continues to stay abreast of loss trend, I am starting to see more competition, which I think is problematic. And I think for a lot of new entrants, in particular, into the primary liability space, I think they're kidding themselves a little bit around the idea that the industry has somehow achieved excellent rate adequacy in that space and that it's a place to make a lot of money. We just don't see it that way.

And then lastly, ceding commissions are stubbornly high, and I think are not justified by the underlying performance, which is why you certainly saw in this quarter's results our written premium for Casualty Pro-Rata was down by 18%. And we will continue to critically evaluate that portfolio.

Now the good news, I would say, is, given all the work we've done in Casualty, we're down to a core portfolio of really exceptional underwriters where we have a lot of confidence in what they're doing. And so we can be, I think, selective and have a lot of confidence in the performance of the existing portfolio. But I certainly don't see us going out from here and trying to regrow that portfolio until conditions improve materially.

Operator

The next question comes from C. Gregory Peters with Raymond James.

Charles Peters

I guess when I -- laser-focusing on the Reinsurance piece, you spent a lot of time talking about the Casualty side, but we also know that the property side is under intense competitive pressures. Can you talk about, when you think about next year, how you think the portfolio within Reinsurance might change or what the headwinds might be to growth? And then sort of map that in with what -- how your views on PMLs look?

James Williamson

Sure. Yes. I mean, look, I think if you piece together the last few questions, right, property on the cat side is going to be challenging. We are fortunate in that we write the majority of our cat XOL business on a nonconcurrent basis. And I think we're shielded from some of the competitive pressures, but it's certainly a reality.

Casualty, we just talked about. And I think on a broad basis, it's sort of the status quo situation.

What I will say though is -- and I made this comment in my prepared remarks, we're still seeing a lot of really interesting places to deploy capital, and it's occurring more in international markets and more in our specialty business. And those tend to be higher margin, very high quality portfolios. We've delivered a lot of expertise into the market. We are a lead, if not the lead, global engineering market. We have a renewable energy vertical that we stood up that's performing exceptionally well that offers differentiated value to clients. We have a performing -- high-performing parametric business, and you can kind of go down the line.

Now from a pure volume perspective, Greg, those subsegments are not going to overtake Property Pro-Rata or Casualty Pro-Rata premiums. But I'm not worried about that. And we don't really get focused on the top line. It's how are we delivering margin. And so I do see some sustained margin development in those parts of the business.

As respect to PMLs, and we've certainly seen it in our net PMLs over the last few quarters, those will more likely than not continue to retract slightly as this market cycle plays itself out. And again, I don't get too worried about that either. It frees up capital. And we have options for deploying that capital. And as we said in the last few calls, that priority for that capital redeployment will be to return it to our shareholders. So it's not necessarily a bad thing that we're being a little more selective and taking some chips off the table from a PML perspective.

Charles Peters

Great. That makes sense. And you sort of teased this and you spoke about it in your comments, but pivoting to the wholesale and specialty business. If we just look at some of the increases in growth that you're seeing in Casualty, financial lines and specialty, maybe you could just spend a second and just tell us where the opportunity -- what you're seeing and the opportunities there? Because those growth rates are pretty impressive.

James Williamson

Yes, sure. No, it's a great question. First of all, I think we are in a really spot with Global Wholesale & Specialty. And I'll certainly -- while we've spent a lot of time talking about the insurance reserves on this call, we're in an equally conservative position on how we're thinking about our loss picks in that business. And all of the indicators are showing that we're developing incremental reserve strength and margin in that business. So those are very good signs.

As respect to growth, look, we came out of last year after we divested retail, we doubled down on our Global Wholesale & Specialty strategy. That business has really come together under Jason Keen's leadership in a great way in terms of its operation, its cohesion across geographies and across lines of business. And we're now starting to see the benefits of that.

Where you're seeing growth though, you really need to look under the covers to see where it's coming from. For example, in Casualty, this is not open market excess casualty for any and every class of business in the U.S. This is targeted growth, mainly internationally and, in particular, in lines of business or areas of the market where we have distinct product expertise and capabilities. So for example, in the area of construction where you're seeing a global boom in data centers and manufacturing, we have specific products, underwriting expertise. We're delivering that to the market, and you're seeing growth.

The other piece of the Casualty story is rate. And we are continuing to drive rate into the market. So with a stable set of -- even with stable exposures, you would expect to see growth.

And I think that same story plays out in financial lines. And then in the specialty markets, which has been the really core area of our focus, very much driving growth in our London market business and increasingly in the U.S. in those specialties. And those, again, are areas where rates are adequate. We have a differentiated position in the market. We're highly valued as a training partner, which is why we could see growth.

And so for GW&S overall, very modest growth in the quarter. But as you unpack it, what you're seeing is a lot of very strong portfolio management in areas where we see more competition like [indiscernible] Casualty, we're decreasing meaningfully in areas like specialty and particularly in London where still lots of great opportunity, we're growing even faster. And we'll continue to manage that dynamic through the coming quarters without a whole lot of concern about what it means for the top line. This is all about driving the right margin outcome, and I think you'll continue to see that.

Operator

The next question comes from Josh Shanker with Bank of America.

Joshua Shanker

Yes. I guess this is for Elias, it's about process on the reserves. If over the last 2 quarters you have not made any changes in to your Casualty reserves, but you had released $550 million of short-tail lines, would that be a process that people should say we've gotten a bit more accurate in our short-tail reserving or that there was a cushion in the reserves that we had at the beginning of the year that we don't have anymore?

I'm trying to -- yes, certainly the Casualty reserves have gotten more conservative, but how should we feel about the reserving on the short-tail side where you've released a lot of reserves to offset that?

Elias Habayeb

Josh, it's Elias. Good question. What I would tell you is -- what it tells you is there is prudence on the property and the short-tail lines from the beginning. And with the favorable loss emergence, it demonstrates the prudence and the strong underwriting in that.

That being said, when I said we have a margin over our actuarial central estimate of $850 million, that's coming from both the long-tail and short-tail lines, but a bigger proportion is coming from the short-tail lines. So while we may have released $500 million year-to-date on short-tail lines, we still have a hefty redundancy within our short-tail line reserves. And I feel comfortable with that.

Joshua Shanker

And one of the things that manufactures short-tail reserve releases is short-tail losses. Since 2Q '25 to present, we really haven't had much cat activity. At what point in the way that you're doing the reserves can enough quarters pass without any major property losses to say, look, we're still conservative, we just don't have the loss reserves up because we haven't had the losses?

James Williamson

Yes, Josh, it's Jim. Let me add a little bit of flavor on this because I think when you unpack the details, particularly within Reinsurance and in our Property Pro-Rata book, a lot has happened over the last few years to reduce the amount of volatility that book contains. So this is very much an attritional loss ratio story when it comes to a lot of the short-tail property reserves. Now that's not to say that it's not influenced by cat activity. It certainly is, but not nearly to the degree I think you're implying.

And then lastly, I would say, and I would ask Elias to weigh in here as well, having said all that, we're also seeing that same strength in our cat book. And when cat events occur, as you saw in this quarter, we're booking those very, very prudently. We don't need an event-free quarter to have strong performance in our cat reserves. That's just not -- that's not the linkage you should be drawing. But I don't know, Elias, anything you'd add to that?

Elias Habayeb

I think you covered it. The one thing I would say is in terms of cats, we did have some movement on cat reserves, some net releases, it's more from the attritional side this quarter. But when we look at individual cats, you got to look at the facts and circumstances of each cat to evaluate if it's matured or not. So some events, you may have to wait a couple of years, some event, less. It depends on the facts and circumstances of those individual events.

Operator

The next question comes from Rowland Mayor with RBC Capital Markets.

Rowland Mayor

As you went through the review process, did you identify any incremental portfolios of business that no longer meet your return thresholds, need to either be non-renewed or divested?

James Williamson

Yes. No, good question. No, not really. I mean we've had a firm bead on the performance of a number of these portfolios. And I would say in Reinsurance, you certainly see that play out over the last several quarters. Casualty, which again is the subject of a lot of the conversation today, we've been reducing consistently over the last couple of years, on the order of magnitude of billions of dollars of reduction in written premium. So we clearly were ahead of that. We saw it in the underwriting. And so feel good about where that portfolio is, and reduced it further, obviously, as you saw in the third quarter.

In GW&S, in a similar way, Jason and his team, I think, took a very critical eye of all those portfolios. And overall, feel excellent about where we're positioned. There have been spots. A recent one that I would cite is transactional liability. We didn't need a reserve study to tell us that, that market was in a bad spot, and we've moved away from it.

So I think our portfolio management in some ways has been well ahead of these reserve outputs. And that means that we're now in a position where as far as the in-force book is concerned, we feel great. And I would, sort of to the last comment, as a proof point of that, you referenced back to Elias' comments on the current accident year loss picks, we didn't feel a need to move them. If we were discovering new, new things about our in-force portfolio, we certainly would be moving those picks, and that's just not the case.

Elias Habayeb

Yes. I agree with what Jim said. I don't know if there were any surprises coming out of those reserve studies. I kind of, Rowland, referred to my comments earlier responding to Alex. What drove a big part of the $600 million in strengthening on Casualty is increasing prudence, because we want to position ourselves to reduce risk of future reserve volatility. So that drove kind of a lot of our decision-making and how we position the balance sheet and contribute to more stable reserves going forward. Recognizing, like, listen, there's still some uncertainty with social inflation, but we feel much more comfortable with where we are today as a result of the actions we took.

Rowland Mayor

That's super helpful. And then for my follow-up, on the AIG renewal portfolio, can you maybe walk through any capital that's locked up as those liabilities run off? How long is the tail? And is it incremental to the current buyback?

Elias Habayeb

So on the nonrenewal part, on the new business, there's not capital that's being consumed. There's capital on the portfolio that we have on our balance sheet. There's the -- the average duration is maybe 3 to 4 years on that for it to release itself. But it's going to depend on the speed and if there's opportunities to accelerate it.

The other thing I'd just, since we're talking about the AIG renewal rights deal, I just want to remind people, is we were getting a TSA payment from AIG about $30 million a month to cover expenses. That one expired at the end of the third quarter. So we won't be having that credit in the fourth quarter.

Operator

The next question comes from Chris Hartwell with Autonomous.

Christopher Hartwell

Apologies to come back again to the reserve question, but I was wondering if you could maybe talk to I guess the split between IBNR and case reserves, in terms of what's really driven the action there. And I guess there's a part B to that -- as Part B to that, where do you think you are in sort of the broader range of sort of best estimate now? I don't know whether you think about that in terms of confidence intervals, but I'd be interested to know where you sort of -- if you think you really are at the maximum you can be there.

Elias Habayeb

Chris, thank you. So in terms of the IBNR versus case reserves, we've definitely increased the proportion of reserves that are IBNR. And with respect to the range, what I could tell you right now is we definitely moved up within the range. We're above our central estimate on that. We have a margin of over $850 million. Most of that margin sits within our Reinsurance business. And that's what gives us confidence with what we did about contributing to more stable reserves and reducing future reserve volatility.

Christopher Hartwell

Okay. And just to sort of come back, and I think it really sort of touches on one of the earlier questions. But if we're thinking about, I guess, management confidence and conservatism within reserving, and obviously, the timing of releases to some extent is within your gift. And so how should we think about, particularly on this sort of -- on this short-tail question, how should we think about the future emergence? I mean if we look at what's effectively been held back on the short-tail lines, I mean, could we expect $100 million a quarter of reserve release in an ordinary period? I don't know. I wonder if you could just sort of help me think about future reserve releases.

Elias Habayeb

No, happy -- our philosophy is we want to book our loss picks conservatively and allow the line to mature and position us in a position where we're more likely to be releasing reserves, than needing to strengthen it. In the short term, we are going to continue to be prudent and maintain conservatism on our balance sheet. So I'm not sure if there will be net favorable reserve releases in the immediate future, but our philosophy is to maintain a strong balance sheet, conservative loss picks. And as they mature, we'll release reserves.

Operator

The next question comes from Michael Zaremski with BMO Capital Markets.

Michael Zaremski

Maybe you can shed light on kind of the rating agencies. I know you've talked in the past about the importance of the rating agencies. I know there's, I believe, a negative outlook. So just does today's actions have any influence on the thought process there, the rating over time?

Elias Habayeb

Yes. Happy to, Mike. What I would say is like if you look at the 3 rating agencies and why they have us a negative outlook, it has nothing to do with the strength of the balance sheet or the solvency of the company. We have a very strong balance sheet from there. They see the franchise value of the company. Historically, what put us on negative outlook, it has been the volatility around reserves. As I said, we think the actions we've done this quarter contributes to more stable reserves and lower reserve volatility going forward. That should be a positive. We, as normal operating procedures, we brief the rating agencies in advance of this earnings call and our earnings results, excluding the reserves. I'm not going to speak for them. But we think with the actions we've done has positioned us in a position to address some of the concerns they've had.

Michael Zaremski

Got it. That's helpful, Elias. And I guess just switching gears to the cat load, loud and clear about what you said about PMLs going forward, but just kind of want to make sure looking at the cat load this quarter versus consensus, a good bit higher. So is there -- should we be penciling in a bit more cat in 3Q on a go-forward basis? Just maybe you shifted appetite to kind of less non-hurricane areas, geographies?

James Williamson

Yes, Mike. As I've said on maybe some past calls, you got to be careful about any 1 quarter's cat activity because it's obviously purely driven by events. And it's been interesting to hear people describe Q3 as a light cat quarter. There was a lot of stuff happening in the world and it's tagging a lot of global insurance and reinsurance companies. So I wouldn't draw any conclusions from this quarter in terms of the future load.

What I would say is, given my earlier comments, I would expect PMLs, all things equal, to decrease marginally as we get into next year. That tends to reduce your cat load. Having said that, remember, the cat load is the expected cat loss, but you got to divide by total earned premium. And that's all earned premium, including Casualty. So the denominator could get smaller as we manage the cycle. And so we'll see where the actual percentage load comes out.

But I don't expect any material shifts. I mean we manage within a pretty reasonable range around the total amount of volatility we want in the group. And I would also take you back to a slide we put in our investor presentation every quarter on our earnings and capital at risk. And you see we've managed that within a pretty confined box and have been able to take advantage of the market within that box. I don't see us doing anything dramatically different next year.

Operator

The next question comes from Yaron Kinar with Mizuho.

Yaron Kinar

Just going back to the commentary that the accident year '26 loss picks are showing to be prudent and don't need additional strengthening, even as prior years, including the more recent year, did. Would you say that the prior year reserves have now reset at the prudence level in margins that you built into 2026?

Elias Habayeb

What I would say, Yaron, is across all years, right now, we have our loss picks in a prudent position. We did strengthen all the prior years within Casualty. But for '26, it was already set at a more conservative level where we started the year. And part of our redundancy of the over $850 million is coming -- a small piece is coming from underwriting year '26. So we didn't feel there's a need to do more on '26.

Yaron Kinar

Okay. And then I think you'd said that there's some additional reserve review to come in the fourth quarter. Would that include the financial lines reserves?

Elias Habayeb

No. The financial lines was largely done this quarter. Fourth quarter would be parts of the international insurance business as well as like cyber and a couple of smaller lines.

Yaron Kinar

Okay. And the reserve strengthening in Casualty, was there anything also in financial lines?

Elias Habayeb

There was. In total, on Casualty, that lumps professional lines, that's how we report it externally. So there were some elements of professional lines that we did strengthen in the $577 million. If you unpack the $577 million, Yaron, about 2/3 of it is coming from North America casualty and it's heavy to your kind of traditional Casualty Pro-Rata, some elements in Casualty XOL, and the rest was kind of more mixed globally.

Operator

The next question comes from Brian Meredith with UBS.

Brian Meredith

So Jim, Elias, I'm just curious, during the whole reserving process, was there any consideration of an ADC cover on the Casualty book? And is that something you may consider in the future just to give maybe the investors a little more confidence?

James Williamson

Sure. I mean, look, Brian, it's -- and I think I've made this comment in the past. We look at all options for managing both capital and our reserves. And we certainly feel that the ADC we'd put in place for our insurance business was prudent and gives us a lot of flexibility, freedom, obviously, is going to free up capital.

So would we consider it? Would we look at it? We could, I think, if conditions were right. What I would reiterate though is given everything Elias has described about what he and Katy and their teams did with our reinsurance reserves, I feel exceptionally confident in where we've landed. And so if I were to think about my decision tree on any potential transactions, it would have to deliver meaningful capital relief benefits for us to be, I think, really interested. But we do from time to time evaluate these things.

Brian Meredith

Great. That's really helpful. And then second question, I'm just curious, we're hearing more and more about business moving from the wholesale E&S markets to the retail markets. I'm wondering if you're observing that in your Global Wholesale business and what impact that potentially has on your business?

James Williamson

Sure. I mean, look, I think the industry data would suggest there's a little bit of movement, but one of the things that I think it's important to understand is there's been a structural shift of business from admitted markets to E&S. And while there may be some oscillation around that new much higher level, no part of me expects there to be the traditional 15, 20 years ago, where it would wash from one bucket to the next based on the market cycle. That is just not happening. There is no way the admitted market could reconsume the risk that's been relocated into E&S.

I would say, for our own business, for Evolution in the U.S., where we write our U.S. E&S book, we are -- we have relatively tiny market share. We've got great products. We've got fantastic leadership. For us, it's about getting our fair share. And so even if the overall pie shrinks marginally, it's not going to change our opportunity one iota. There's plenty of good business for us to be writing in that space.

Elias Habayeb

I'm going to jump in guys one minute to clarify something on the TSA payments with AIG. I may have said $30 million a month. It's $30 million a quarter.

Operator

The next question comes from David Motemaden with Evercore.

David Motemaden

Just had another question for Elias on the Casualty reserves. Could you just unpack how much of that $850 million risk margin is on the Casualty Reinsurance business, and how we should think about that going forward? Is that a buffer that we should think about that can absorb additional adverse development or increases above the central estimate?

Elias Habayeb

David, it's Elias. So if I unpack the $850 million, the majority of it sits on the Reinsurance balance sheet and a smaller piece of it sits within our GW&S business. But the vast majority of it ties to Reinsurance. Within Reinsurance, that covers both the long-tail lines as well as the short-tail lines. The short-tail lines are a bigger proportion.

But on the Casualty side itself, we are booked above the central estimate. And that's part of the conservatism we brought to our decision making this quarter.

David Motemaden

Got it. Okay. So that -- I guess, yes, I guess I'm just sort of thinking in the past, I think at the end of 2024, you guys had talked about $180 million -- I think it was $180 million of risk margin that was embedded in the Casualty Re reserves. So I guess this number is all in. You had said some of the short-tail. So I guess could you just clarify maybe just more like specifically with Casualty Re, how much of a margin is there as a percentage of the reserve base?

Elias Habayeb

Yes. Well, let me take a step back. So first, our actuarial central estimate has moved up and it's more conservative than where we were before. So within that actuarial central estimate, there's more conservatism. We didn't give credit to underwriting action. We didn't see in the data. We didn't give credit to the potential for case reserve strengthening. We know it's happening in our book. We've made investments on claims handling. And as a result, that accelerated setting up case reserves and improve the adequacy of case reserves. We see some of that data also coming through from some of our cedents, but we did not make any adjustments for that. As well as we build conservatism by building conservatism in the older accident years and rolling it forward.

So you got to start, David, with thinking the actuarial central estimate is more conservative than where we've been. So to me, there's some margin inherent as a result within our actuarial central estimate. And then on top of that, we booked in excess of that. So you've got implicit margins in the central estimate as well as on top of it, and that's what gets us to be more comfortable with where we are and comfortable that we've reduced the potential for future reserve volatility.

David Motemaden

Okay. And maybe just quickly on that, the actuarial central estimate, I guess, how much has that moved up now versus the end of 2025 and the end of 2024?

Elias Habayeb

So I can't speak to the end of '24, but the central estimate moved up in a few hundred million this quarter. And top of it, if you look -- since I've been here, the margin on top of the central estimate also moved up by a few hundred million.

Operator

The next question comes from Matthew Heimermann with Citi.

Matthew Heimermann

I guess just one quick one, I'll follow up on my others. But just on the Legacy segment, if my math is right, it looks like that's paying down like $500 million per quarter. I just was curious whether or not that was representative of the numbers you have internally, and just trying to tie that back to capital freeing up on that book of business.

Elias Habayeb

Yes. What you're seeing is -- it is coming down and what you're seeing, what's paying down is the short-tail lines within that book, more than the long-tail lines, which is what you would expect. It's paying down in line with our expectations within that book. We haven't seen anything different than what our expectation is.

Matthew Heimermann

Okay. Is that -- should we expect that if that's mostly short-tail, that long-tail will pick up and kind of keep that level of paid losses similar? Or will that degrade over time as the short-tail pays out?

Elias Habayeb

We expect both to pay down over time. You're just seeing fast around the short-tail lines than the long-tail line. Duration on the overall book today is about 3 to 4 years.

Operator

The next question comes from Elyse Greenspan with Wells Fargo.

Elyse Greenspan

My first question is on the -- sorry, the Reinsurance segment. So you guys have been trending, from an underlying combined ratio basis, right, just around 85 so far this year, right? It sounds like your commentary on the reinsurance market is really both property and Casualty will be more competitive next year. So do you expect that underlying combined ratio, right, that's kind of been within range of 85, do you expect that to trend up in '27 based on how you guys see the market today?

James Williamson

Sure, Elyse. I would think about it in terms of a couple of countervailing trends. One, as you point out, things are getting a little more competitive. And so all things equal, that tends to put upward pressure on your underlying combined. And as you've heard, I think, abundantly today, we're not playing any games with the loss picks. We intend to keep them in a conservative spot. And so that would certainly support that trend.

The countervailing pieces though that we'll have to keep an eye on is, as I said earlier, a lot of really interesting places to deploy capacity, particularly in our specialty businesses. Those are -- those tend to be very high-performing businesses. I think that will be quite favorable. And then there's just an earned premium mix reality with the ramp-up of the Annapurna vehicle that will reduce the amount of Casualty earned premium, which obviously sits at a higher attritional combined. So those things will mix together and come up with the results. I'm not going to predict what that will be, but just give you some sense of how to think about it.

Elyse Greenspan

And then my second question, going back to the actuarial estimate, right, versus the risk margin, right? So you said you're $850 million above, right, that actuarial estimate. And I think you said the actuarial estimate went up by like a few hundred million. What was the $850 million, the best estimate, what was that before this reserve charge?

Elias Habayeb

Yes. So if I look at it where we were at the end of June, we've moved in like probably like $300 million up since June.

Elyse Greenspan

So both moved up about $300 million?

Elias Habayeb

No. The margin over the ACE moved up $300 million, and we moved the ACE up by a few hundred million.

Elyse Greenspan

Okay. Got it.

James Williamson

And Elyse, if I could just come over the top on that, just what I take away from that, I think what's important to understand is, notwithstanding what we've observed in the back book. we are building reserve strength continuously. That's been a reality now for a number of quarters. And so I think that's a very favorable trend line given where we're at.

Operator

The next question comes from Tracy Benguigui with Wolfe Research.

Tracy Benguigui

Just going back to the recent discussion, Elias, you said that you took the ACE base line up and then added a risk margin on top. I always assumed that the MBE was where you had subjectivity and ACE was from an external actuarial perspective. So to be sure who is moving up the ACE, is that Everest or a third-party actuary?

Elias Habayeb

So the actuarial central estimate is the indications we get from our reserving actuaries. So that's based on their judgment from that. And so it was the work that Katy and I, with our reserving actuarial team, and kind of getting feedback from underwriting and claims that kind of went into our judgments. And what moved up the -- our ACE is the stuff I referenced before about refreshing sales factors, loss development patterns, expected loss ratio selections. So all that increased it.

And then over and above that, we made the judgment from a management perspective where we want to be booked. And part of it is we decided not to release the short-tail development that we could have released as well as booking our Casualty over and above our actuarial central estimate.

Tracy Benguigui

Okay. So it sounds like your ACE was internal, would that risk margin been different compared to a third-party actuarial ACE?

Elias Habayeb

So listen, you bring 3 actuaries in the room, you'll get 3 very different opinions. I think the work our internal reserving actuaries did this quarter was pretty robust. And we have our auditors, they do their own work independently. And from what I understand is they found our work to be reasonable.

Tracy Benguigui

Okay. Heads up, my next question is pretty technical, so please bear with me. You have $2.4 billion of debt that's about to lose its BMA and S&P capital treatment. I recognize that you sound optimistic on exceeding your $300 million buyback floor. And it's also quite remarkable that S&P at least still thinks you have substantial AA capital despite losing this credit.

So my question is, given how low the coupons are on that legacy debt, is it fair to assume that you wouldn't refinance it? And is it also practical to just amend the indenture language to make them explicitly contractually subordinate to operating companies? So you could keep the capital credit without having to recap at higher rates. Do you think the BMA will be on board with that?

Elias Habayeb

So let me address that. So one, from an S&P perspective, as they said in their notice, even by not giving us capital credit for the debt, we had this excess over what their threshold is, and that speaks to the strength of our balance sheet.

The second, on -- we are having constructive discussions with our regulators. There's multiple options around how we get that debt to be compliant. And most of these options don't involve us having to reset the coupons and we could protect where we are pretty much.

So I'm not worried about it. We'll get this sorted out, and I don't think there's going to be a punitive outcome coming out of it. But the thing I'll take you back to, Tracy, is we have a strong balance sheet. And where we land on the debt does not change that.

Operator

The last question today will come from Ryan Tunis with Cantor.

Ryan Tunis

I guess first question, ignoring the $850 million margin, how much movement was there from these actions on the actuarial central estimate?

Elias Habayeb

Ryan, as I mentioned earlier, our actuarial central estimate moved by a few hundred million dollars. That's reflecting the extra prudence we baked into it. So if I unpack -- if I go back to my commentary on the approximately $600 million in reserve strengthening on Casualty, the biggest driver behind it is we wanted to be in a more conservative position to reduce reserve risk volatility going forward and provide more stability around that reserve.

So we were more conservative with how we set our actuarial assumptions around Casualty, and we went through a pretty robust process. At the same time, we decided -- and we had the ability to offset it. We decided not to fully offset it, and we held back most of the favorable loss emergence on short-tail lines.

Ryan Tunis

Just thinking about -- when I look at the premium reduction in Casualty that's still happening on the reinsurance side. I guess what I'm struggling with is presumably that's premium that you could have gotten rid of a year ago, and you're just choosing to get rid of it now. So it feels like you might be seeing something. So I'm just curious, like how you square that with the comments about prudence in the 2026 loss picks?

James Williamson

Sure. Yes, Ryan, look, I think one thing to keep in mind is when you see written -- even written premium flowing through our financials in the third quarter, that is premium we got rid of in the past, last year and certainly at 1/1. And what I would really indicate is this is an evolving environment. I mean if anybody's sitting out there thinking that social inflation was a thing that happened and stopped happening, that you're thinking about it the wrong way.

So we reevaluate ground up every quota share, every Casualty quota share transaction that we do every year to an actuarial and an underwriting exercise, a lot of the analytics. And our perspective on any given deal could change. It could change because we see some movement in the underlying results from the cedent. It could change because they've changed their mix in a way that we don't like. We have extremely robust analytics around the underlying portfolio composition and how it reflects in our results. And so the team response to those factors. The cedent commission could be going up, and we respond to that.

So it's really a combination of things that result in our underwriting decisions. And I think all of those things are inuring to the benefit of the loss pick, not putting pressure on the loss pick. I think those are underwriting actions that, as Elias has indicated a few times, we're not taking credit for, but I do think those will prove to be good guys for us over time.

Operator

Thank you. This concludes our question-and-answer session and the Everest Group Limited Third Quarter 2026 Earnings Conference Call. Thank you for attending today's presentation. You may now disconnect.