Everest gets revised negative outlook from AM Best following Q3’25 reserve charges

Credit ratings agency AM Best has revised the outlooks of Everest Group, Ltd. and its operating subsidiaries to negative from stable, and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior).

At the same time, Everest Group, Ltd. and Everest Reinsurance Holdings, Inc. (Delaware) have also received a revised outlook of negative from stable, with the affirmed Long-Term ICRs of “a-” (Excellent). Further, Everest Reinsurance Holdings, Inc. has also received the same negative outlook from stable with an affirmation of the Long-Term Issue Credit Ratings (Long-Term IRs).

The ratings reflect Everest’s balance sheet strength, assessed as strongest, its adequate operating performance, very favourable business profile and appropriate enterprise risk management (ERM) capabilities. However, these changes reflect the recent developments in Everest’s operations, which reflect elevated uncertainty surrounding the group’s business profile and ERM, according to AM Best.

This includes the Bermuda-based insurance and reinsurance firm’s third-quarter reserve charges of $478 million that were related primarily to its retail commercial insurance business.

AM Best explained that this represents Everest’s second material reserve charge in the past 12 months, following $1.5 billion of adverse development reported in the fourth quarter of 2024, which was also largely driven by the group’s retail commercial portfolio.

For context, the ratings rationale also places uncertainty on the firm’s decision to sell its retail commercial book of business through a renewal rights transaction with American International Group, Inc., as well as the signing of an adverse development cover on this book of business for accident years 2024 and prior.

According to AM Best, “The addition of an adverse development cover and the sale of the retail commercial insurance business provide more confidence that Everest’s prospective performance will return to historically stronger levels. The negative outlooks, nevertheless, reflect heightened operational risk as the group shifts its strategy to focus exclusively on its reinsurance and global specialty insurance segments, which together comprise more than 80% of the group’s business and have performed very well historically. An emergence of adverse development in Everest’s remaining business lines, or challenges resulting from restructuring the current group to realign with its new focus, could increase negative pressure on the group’s ratings in the near term.”