Oct 29, 2026 earnings call — Reserve strengthening and capital returns
Company moved reserves to over $850 million above actuarial central estimates, while returning about $550 million to shareholders this quarter.
Revenue $3.7B (est $3.8B) · EPS $7.62 (est $9.38)
Key quotes
"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."
"Our strategy is centered around strengthening our core underwriting businesses while managing the cycle with relentless discipline."
"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."
Analyst Q&A 15
reserve review confidence
Q (Alex Scott · Barclays): Analyst asked how confident management is in the reserve review process and whether it returns reserves to a more normal position. He also asked about 1/1 renewals and need for more underwriting actions.
A: Management said they ran a thorough reserve review to increase conservatism and reduce future reserve volatility, and that they moved the actuarial central estimate higher while increasing the margin above it to over $850 million. For 1/1 renewals, they expect more competition and some rate decreases in CAT renewals, and they will be selective on programs and focus on best-in-class cedents and terms.
"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." — Elias Habayeb (CFO)
short-tail reserve releases
Q (Andrew Andersen · Jefferies): Analyst asked why management did not recognize more of the favorable short-term emergence. He also asked how they keep discipline without losing market relevance.
A: Management said they could have released more favorable short-tail emergence but chose not to in order to increase conservatism and reduce reserve volatility. They also said the firm can prune exposures in soft markets and re-enter in hard markets because of agility, strong client relationships, and differentiated expertise.
"We chose not to, and that ties to our objective of this reserve study is increasing the conservative position on the balance sheet and to position us to reduce future reserve volatility risk." — Elias Habayeb (CFO)
showing loss triangles
Q (Meyer Shields · KBW): Analyst asked whether the company will update year-end global loss triangles to show the strengthening and give more confidence in reserves.
A: Management said they will take that request under consideration and that their process has been to release the triangles after finishing all reserve studies for the year. They noted there are still some fourth-quarter studies to complete even though material long-tail work was done this quarter.
"Our process was to release it after we're done with all the reserves for the year." — Elias Habayeb (CFO)
reinsurance portfolio and PMLs
Q (C. Gregory Peters · Raymond James): Analyst asked how the reinsurance portfolio might change next year given competitive pressure on property and casualty, and how PMLs look.
A: Management said property CAT will be challenging and casualty remains difficult, but they see attractive opportunities in international and specialty businesses that deliver higher margins. They said net PMLs have retracted in recent quarters and will more likely than not continue to retract slightly as the market cycle plays out.
"As respects 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." — Jim Williamson (CEO)
short-tail versus casualty reserves
Q (Josh Shanker · BofA): Analyst asked whether short-tail releases mean earlier conservatism was excessive or simply improved accuracy, and when lack of catastrophe activity could affect reserve views.
A: Management said the short-tail reserving showed prudence and strong underwriting and that while $500 million was released year to date, a larger redundancy remains in short-tail reserves. They also said short-tail performance is more attritional and not solely dependent on cat activity, and they are booking cat events prudently without needing event-free quarters to show strength.
"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." — Elias Habayeb (CFO)
portfolios to drop or divest
Q (Rowland Mayor · RBC): Analyst asked whether the reserve review identified any portfolios that no longer meet return thresholds and need non-renewal or divestment, and asked about AIG renewal portfolio capital lock-up and tail.
A: Management said they have largely already acted and did not find many new portfolios needing divestment; they've been reducing casualty and exiting troubled segments like transactional liability. For the AIG non-renewal portfolio, they said the in-force capital is on the balance sheet and the average duration to release is about three to four years, and a $30 million quarterly TSA payment from AIG expired at quarter end.
"We've had a firm bead on the performance of a number of these portfolios, and I would say in reinsurance, you've certainly seen that play out over the last several quarters." — Jim Williamson (CEO)
IBNR vs case reserves
Q (Chris Hartwell · Autonomous): Analyst asked about the split between IBNR and case reserves driving reserve action and where management sits in the best-estimate range.
A: Management said they increased the proportion of reserves that are IBNR and that they moved up within the range to be above their central estimate. They added that the margin over the central estimate is over $850 million, mostly on the reinsurance balance sheet.
"we have definitely increased the proportion of reserves that are IBNR." — Elias Habayeb (CFO)
rating agencies outlook
Q (Michael Zaremski · BMO): Analyst asked whether the reserve actions affect rating agency thinking given negative outlooks and whether this helps the ratings over time.
A: Management said the negative outlooks were driven by prior reserve volatility, not balance sheet strength, and that the actions this quarter should contribute to more stable reserves and lower reserve volatility. They said they briefed rating agencies in advance but would not speak for them, and they expect the actions to address some agency concerns.
"If you look at the three 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." — Elias Habayeb (CFO)
2026 loss picks and prior years
Q (Yaron Kinar · Mizuho): Analyst asked if prior year reserves have been reset to the prudence level now used in 2026, and whether fourth-quarter reviews include financial lines.
A: Management said across all years they have loss picks at a prudent position and they had strengthened prior casualty years but 2026 already started the year conservatively so needed no change. They said financial lines were largely done this quarter and fourth-quarter work will cover parts of international insurance, cyber and a few smaller lines.
"Across all years, right now we have our loss picks at a prudent position." — Elias Habayeb (CFO)
ADC or other reserve transactions
Q (Brian Meredith · UBS): Analyst asked whether management considered an ADC cover on the casualty book to give investors more confidence and whether business is moving from wholesale to retail markets.
A: Management said they consider all options to manage capital and reserves and that the ADC placed for their insurance business was prudent and flexible; they would consider similar transactions if they delivered meaningful capital relief. On wholesale-to-retail movement, they said the shift to E&S is structural and that their US E&S business has small share but good products, so the opportunity remains ample.
"We look at all options for managing both capital and our reserves, and we certainly feel that the ADC we put in place for our insurance business was prudent and gives us a lot of flexibility." — Jim Williamson (CEO)
where the $850 million sits
Q (David Motemaden · Evercore): Analyst asked how much of the $850 million margin sits on the casualty reinsurance business and whether it can absorb adverse development above the central estimate.
A: Management said the majority of the $850 million sits on the reinsurance balance sheet and a smaller piece sits in GW&S, covering both long-tail and short-tail lines with short-tail making a bigger proportion. They said the casualty side itself is booked above the central estimate as part of the conservatism added this quarter.
"If I unpack the $850 million, the majority of it sits on the reinsurance balance sheet." — Elias Habayeb (CFO)
legacy segment paydown
Q (Matthew Heimermann · Citi): Analyst asked whether the legacy segment is paying down roughly $500 million per quarter and how that ties to capital freeing.
A: Management said the paydown is occurring and is driven more by short-tail lines than long-tail lines, and it is paying down in line with expectations. They said both short-tail and long-tail will pay down over time and overall duration on the book is about three to four years.
"What you are seeing is it is coming down and what you are seeing, what is paying down is the short-tail lines within that book, more than the long-tail lines, which is what you would expect." — Elias Habayeb (CFO)
reinsurance combined ratio outlook
Q (Elyse Greenspan · Wells Fargo): Analyst asked if the reinsurance underlying combined ratio around 85 will trend up in 2027 given more competitive property and casualty markets.
A: Management said countervailing trends exist: competition could raise combined ratios while conservative loss picks support them, but growth in specialty high-margin businesses and mix changes could offset pressure. They would not forecast a number but suggested the mix and specialty opportunities matter for future combined ratio outcomes.
"The countervailing pieces, though, that we will 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." — Jim Williamson (CEO)
who sets the actuarial central estimate
Q (Tracy Benguigui · Wolfe): Analyst asked who moves the actuarial central estimate (ACE) and whether the ACE was internal or third-party, and if a third-party ACE would yield a different risk margin.
A: Management said the ACE indications come from their reserving actuaries and that Katy and Elias, with the reserving actuarial team plus underwriting and claims input, refreshed tail factors, development patterns and expected loss ratios to move up the ACE. They noted different actuaries can have different opinions and their auditors independently found the work reasonable.
"The actuarial central estimate is the indications we get from our reserving actuaries." — Elias Habayeb (CFO)
how much ACE moved
Q (Ryan Tunis · Cantor): Analyst asked how much the actuarial central estimate moved ignoring the $850 million margin, and how that squares with ongoing casualty premium reductions.
A: Management said the actuarial central estimate moved by a few hundred million dollars as they baked in extra prudence, and they held back much of the favorable short-tail emergence instead of fully offsetting the strengthening. They added that underwriting actions reducing written premium are responses to evolving deal-level analytics and do not require taking credit in the loss pick.
"our actuarial central estimate moved by a few hundred million dollars." — Elias Habayeb (CFO)