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Research Alert: Eg Posts Mixed Q1 Results Amid Restructuring

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-- CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

EG reported Q1 operating EPS of $16.08 versus $6.45 a year ago, exceeding our $15.27 estimate and the $13.96 consensus view. Operating revenues declined 4.4% on a 7.2% drop in earned premiums and 15% rise in investment income, while the combined ratio improved dramatically to 91.2% from 102.7%. We applaud EG's strategic restructuring, including the sale of renewal rights to its retail commercial insurance business to focus on its core reinsurance operations, which account for over 75% of its premium base. EG expects pretax charges of $250-350M over 2025-2026 and has entered an adverse development cover transaction covering $5.4B of liability reserves. However, we remain concerned that becoming a pure-play reinsurer may not expand valuation multiples given EG's mixed underwriting track record. We see execution risk in this strategy, particularly amid a softening reinsurance pricing environment. Despite the Q1 EPS beat, we remain cautious at this juncture.

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