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Everest Re Group (RE) Beats on Q3 Earnings and Revenues
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Everest Re Group Ltd. reported third-quarter 2016 operating earnings of $6.53 per share that surpassed the Zacks Consensus Estimate by 43.2%. The outperformance was driven by an increase in premiums and investment income.
The bottom line also improved 44.2% from the prior-year quarter. The year-over-year improvement can primarily be attributed to strong underwriting margins and a well-balanced investment portfolio that helped to generate solid investment income returns.
Including net realized capital gain of 53 cents per share, the company’s net income soared 253% year over year to $7.06 per share.
Operational Update
Everest Re Group’s total operating revenue of $1.5 billion remained flat year over year. However, revenues outpaced the Zacks Consensus Estimate of $1.4 billion.
Gross written premiums grew 3% year over year to $1.8 billion. Excluding foreign currency fluctuations, premiums were up 4% in the reported quarter.
The property and casualty (P&C) insurer’s net investment income came in at $122.7 million in the quarter, up 6.3% year over year. This included an income of $17.1 million on limited partnership investments.
Total claims and expenses decreased 4.8% year over year to $1.2 billion. Decrease in incurred losses and loss adjustment expenses, along with lower interest, fees and bond issue cost amortization expense resulted in the decline in total cost.
Combined ratio improved 500 basis points (bps) year over year in the third quarter to 85.6%. Excluding catastrophe losses, reinstatement premiums, and prior period loss development, the metric improved 390 bps to 84.4%.
Financial Update
Everest Re Group exited the quarter with total assets of $21.7 billion, up 5.4% from $20.55 billion at the end of 2015. Everest Re’s shareholder equity at the end of the reported quarter rose 5.7% to $8.0 billion compared with the 2015-end level of $7.6 billion.
Total cash balance at the end of the quarter jumped 53.6% to $435.8 million from $283.7 million at the end of 2015. Everest Re Group's cash flow from operations was $276.3 million in the third quarter, up 2.3% year on year.
Book value per share increased 10.4% to $196.67 as of Sep 30, 2016 from $178.21 at the end 2015.
Return on equity was 11% in the first nine months of 2016.
Share Repurchase Update
During the quarter, Everest Re Group bought back 1.0 million shares for $192.9 million at an average price of $190.21 per share. Subsequent to the third quarter, the company also bought back shares worth $7.1 million. The company now has 2.0 million shares available for repurchase.
Dividend Update
The company declared a dividend of $1.15 per share in the quarter, up 21.1% from year-ago quarter.
Among the other players from the same space that have reported their third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) and The Travelers Companies Inc.. (TRV - Free Report) beat their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) missed the same.
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Everest Re Group (RE) Beats on Q3 Earnings and Revenues
Everest Re Group Ltd. reported third-quarter 2016 operating earnings of $6.53 per share that surpassed the Zacks Consensus Estimate by 43.2%. The outperformance was driven by an increase in premiums and investment income.
The bottom line also improved 44.2% from the prior-year quarter. The year-over-year improvement can primarily be attributed to strong underwriting margins and a well-balanced investment portfolio that helped to generate solid investment income returns.
Including net realized capital gain of 53 cents per share, the company’s net income soared 253% year over year to $7.06 per share.
Operational Update
Everest Re Group’s total operating revenue of $1.5 billion remained flat year over year. However, revenues outpaced the Zacks Consensus Estimate of $1.4 billion.
Gross written premiums grew 3% year over year to $1.8 billion. Excluding foreign currency fluctuations, premiums were up 4% in the reported quarter.
The property and casualty (P&C) insurer’s net investment income came in at $122.7 million in the quarter, up 6.3% year over year. This included an income of $17.1 million on limited partnership investments.
Total claims and expenses decreased 4.8% year over year to $1.2 billion. Decrease in incurred losses and loss adjustment expenses, along with lower interest, fees and bond issue cost amortization expense resulted in the decline in total cost.
Combined ratio improved 500 basis points (bps) year over year in the third quarter to 85.6%. Excluding catastrophe losses, reinstatement premiums, and prior period loss development, the metric improved 390 bps to 84.4%.
Financial Update
Everest Re Group exited the quarter with total assets of $21.7 billion, up 5.4% from $20.55 billion at the end of 2015. Everest Re’s shareholder equity at the end of the reported quarter rose 5.7% to $8.0 billion compared with the 2015-end level of $7.6 billion.
Total cash balance at the end of the quarter jumped 53.6% to $435.8 million from $283.7 million at the end of 2015. Everest Re Group's cash flow from operations was $276.3 million in the third quarter, up 2.3% year on year.
Book value per share increased 10.4% to $196.67 as of Sep 30, 2016 from $178.21 at the end 2015.
Return on equity was 11% in the first nine months of 2016.
Share Repurchase Update
During the quarter, Everest Re Group bought back 1.0 million shares for $192.9 million at an average price of $190.21 per share. Subsequent to the third quarter, the company also bought back shares worth $7.1 million. The company now has 2.0 million shares available for repurchase.
Dividend Update
The company declared a dividend of $1.15 per share in the quarter, up 21.1% from year-ago quarter.
EVEREST RE LTD Price, Consensus and EPS Surprise
EVEREST RE LTD Price, Consensus and EPS Surprise | EVEREST RE LTD Quote
Zacks Rank
Currently, Everest Re Group holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Performance of Other P&C Insurers
Among the other players from the same space that have reported their third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) and The Travelers Companies Inc.. (TRV - Free Report) beat their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) missed the same.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>