Everest Re Estimates Cat Loss

Everest Re Group, Ltd. ( RE - Analyst Report ) expects net loss from claims arising from floods in Thailand to range between $100 million and $125 million, after reinstatement premiums and taxes. The loss to the industry is expected to total $10 billion and $15 billion.

The Thai floods occurred after three big typhoons.

The company also estimates an increase of about $26 million to its net after-tax loss estimate from the Japan earthquake.

The company over the last few quarters continued to suffer cat losses. Total pre-tax catastrophe losses net of reinstatement premiums, were $119.4 million in the third quarter as against $89.4 million in the year ago quarter.

Underwriting gain in the third quarter dipped 63% to total $7.2 million with the combined ratio improving 30 basis points year over year to 95.6%.

However, Everest Re stated that though it had incurred huge cat losses in 2011, its balance sheet continues to remain solid.

Everest Re Group Ltd. has reported a strong third quarter on the back of stronger core underwriting results, due to better underlying margins and slightly higher earned premiums, positive alternative investment income, lower derivative and other expenses, higher recurring net investment income and a lower share count, partly offset by high catastrophe losses.

The Zacks Consensus Estimate for fourth-quarter 2011 is $2.62 per share. For full years 2011 and 2012, the Zacks Consensus Estimates are, respectively, $1.80 per share and $11.77 per share.

We retain our Neutral recommendation on Everest Re Group. The quantitative Zacks #3 Rank (short term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.

Based in Hamilton, Bermuda, Everest Re Group Ltd. writes property and casualty reinsurance and insurance in the United States, Bermuda and international markets. The company competes with White Mountains Insurance Group, Ltd. ( WTM - Snapshot Report ) .