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Everest Re Group Ltd. (RE - Analyst Report) reported its third quarter 2012 operating earnings of $4.05 per share, substantially beating the Zacks Consensus Estimate of $3.44. The results surged 50% from $2.70 earned in the prior-year quarter.

Including after tax net realized capital gains and loss, the company reported net income of $4.82 per share against $1.16 per share reported in the year-ago quarter.

Operational Update

Total revenue for the quarter came in at $1.22 billion, up 19% year over year. Gross written premiums were up 7% year over year to $1.2 billion, attributable largely to the acquisition of Heartland.

Net investment income dropped 3% over the prior-year quarter to $152.0 million, primarily due to declining reinvestment rates.

Total claims and expenses were down 11% year over year to $900.0 million, primarily due to lower incurred losses and loss adjustment expenses.

The loss and combined ratios for 3Q12 were 59.8% and 87.2%, respectively, compared with 69.0% and 95.6% recorded in the third quarter of 2011.

Segment Results

The company’s Insurance segment reported net premium written of $232 million, up 14.1% year over year. The segment reported underwriting loss of $28.2 million, compared with an underwriting loss of $42.3 million in prior-year quarter. Combined ratio was 112.9%, compared with 119.6% in the year-ago quarter.

The Reinsurance segment reported premium written of $868.4 million, down 2.0% year over year. Underwriting gain was $157 million, up from $88.5 million in the year-ago quarter. Combined ratio improved to 80.1% from 89.3% in the comparable quarter last year.

Financial update

Shareholders’ equity as of the end of the reported quarter was $6.8 billion, up 12% from the $6.1 billion at December 31, 2011.

Book value per share increased 16% from $112.99 as on December 31, 2011 to $131.22 as of September 30, 2012.

Share Repurchase Update

During the quarter under review, Everest Re spent $25 million to buyback 229,100 shares. The company is still left with 4.7 million shares under its current share buyback authorization program.

Everest Re currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Its peer, Reinsurance Group of America Inc. (RGA - Analyst Report) also retains a Zacks #3 Rank.

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