Back to top

Image: Bigstock

Everest Re (RE) Q3 Earnings Lag Estimates, Revenues Rise Y/Y

Read MoreHide Full Article

Everest Re Group, Ltd. (RE - Free Report) reported third-quarter 2020 operating net income per share of $2.42, missing the Zacks Consensus Estimate by 13.9%. The bottom line also declined 28.6% year over year.

The quarter witnessed higher premiums across its Reinsurance and Insurance businesses, and increased net investment income, offset by elevated expenses.

Everest Re Group, Ltd. Price, Consensus and EPS Surprise Everest Re Group, Ltd. Price, Consensus and EPS Surprise

Operational Update

Everest Re’s total operating revenues of $2.5 billion increased 21.5% year over year on higher premiums earned.

Gross written premiums improved 16.2% year over year to $2.8 billion. In the Reinsurance segment, gross written premiums grew 20% year over year to $2.1 billion while in the Insurance segment, the same increased 6% year over year to $705 million.

Net investment income was $234 million in the quarter under review, up 29.4% year over year due to limited partnership gains of $88.8 million.

Total claims and expenses increased 19.9% to $2.3 billion, primarily due to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses and corporate expenses.

Underwriting loss was $114.6 million, wider than the year-over-year underwriting loss $27.5 million. Reinsurance segment incurred an underwriting loss of $90.4 million, wider than the year-over-year underwriting loss of $44.7 million while the Insurance segment incurred an underwriting loss of $24.2 million against the year-ago profit of $17.2 million.

Combined ratio deteriorated 380 basis points (bps) to 105.2%. Excluding the catastrophe and Covid-19 pandemic losses, attritional combined ratio was 85.8%, improving 130 bps from the prior-year period.

Pre-tax catastrophe losses were $300 million, net of reinsurance and reinstatement premiums, which grew 7.1% from the year-ago quarter. These losses include the impact of hurricanes Laura, Isaias and Sally, wildfires in California and Oregon, and other events including the Midwest US Derecho windstorm.

Combined ratio deteriorated 230 bps to 105.4% in the Reinsurance segment while the same worsened 810 bps to 104.5% in the Insurance segment.

Financial Update

Everest Re exited the quarter with total investments and cash worth $23.1 billion, up 11.3% from the 2019-end level. Shareholder equity at the end of the reported quarter increased 5% from the level at 2019 end to $9.6 billion.

Book value per share was $239.98 as of Sep 30, 2020, up 9.3% on a dividend adjusted basis from the level at 2019 end.

Annualized net income return on equity was 11%, reflecting an expansion of 620 bps from the year-ago period.

Everest Re’s cash flow from operations was $1.1 billion in the third quarter, up 71.5% year over year.

The company paid common share dividends of $61.9 million during the quarter.

Zacks Rank

Everest Re currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Third-quarter earnings of Willis Towers Watson Public Limited Company (WLTW - Free Report) , AXIS Capital Holdings Limited (AXS - Free Report) , Markel Corporation (MKL - Free Report) beat the respective Zacks Consensus Estimate.

Have You Seen Zacks’ 2020 Election Stock Report?

The upcoming election could be a massive buying opportunity for savvy investors. Trillions of dollars will shift into new market sectors after the election. The question is, which sectors will soar for each candidate? Zacks has put together a new special report to help readers like you target big profits.

The 2020 Election Stock Report reveals specific stocks you’ll want to own immediately after the results are announced – 6 if Trump wins, 6 if Biden wins. Past election reports have led investors to gains of +71%, +83%, even +185% in the following months. This year’s picks could be even more lucrative.

Check out Zacks’ 2020 Election Stock Report >>