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Everest Re (RE) Q4 Earnings Lag Estimates, Revenues Rise Y/Y
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Everest Re Group, Ltd. delivered fourth-quarter 2020 operating net loss per share of $1.12, wider than the Zacks Consensus Estimate of a loss of $1.03 per share. In the year-ago quarter, the company had recorded income of $3.20 per share.
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’s total operating revenues of $2.6 billion increased 20.7% year over year.
Gross written premiums improved 12.9% year over year to $2.7 billion. The company’s worldwide reinsurance premiums increased 12% year over year to $1.8 billion, driven by new business opportunities, growth with existing customers, and improved rates and terms and conditions. Direct insurance premiums increased 15% to $871.9 million, driven primarily by new business opportunities, strong renewal retention, and rate improvement.
Net investment income came in at $222 million in the quarter under review, up 52.2% year over year.
Total claims and expenses increased 32.4% to $2.6 billion due to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses, corporate expenses, interest, fees and bond issue cost amortization expense.
Underwriting loss was $218.7 million, much wider than the year-ago underwriting loss of $28.8 million. The Reinsurance segment incurred an underwriting loss of $224.7 million, wider than the year-ago underwriting loss of $54.9 million while underwriting income in the Insurance segment decreased 77.3% to $5.9 million.
Combined ratio deteriorated 760 basis points to 109.1%. Combined ratio deteriorated 850 bps to 112.4% in the Reinsurance segment while the same deteriorated 390 bps to 99% in the Insurance segment.
Pre-tax catastrophe losses were $70 million, which decreased 68.9% from the year-ago quarter.
Financial Update
Everest Re exited the quarter with total investments and cash worth $ 25.5 billion, up 22.7% from the 2019-end level.
Shareholder equity at the end of the reported quarter increased 6.5% from the figure at 2019 end to $9.7 billion.
Annualized net income return on equity was 2.8% in the quarter under review.
Everest Re’s cash flow from operations was $2.9 billion in 2020, up from $1.9 billion in 2019.
The company repurchased no common shares in the quarter.
Full-Year Update
For the full year, gross written premiums were $10.4 billion, up 14.8% year over year. In 2020, Everest Re delivered operating income of $7.46 per share, declining 65% year over year.
Zacks Rank
Everest Re currently carries a Zacks Rank #4 (Sell).
Fourth-quarter earnings of Chubb Limited (CB - Free Report) , Reinsurance Group of America (RGA - Free Report) , and Markel Corporation (MKL - Free Report) beat the respective Zacks Consensus Estimate.
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Everest Re (RE) Q4 Earnings Lag Estimates, Revenues Rise Y/Y
Everest Re Group, Ltd. delivered fourth-quarter 2020 operating net loss per share of $1.12, wider than the Zacks Consensus Estimate of a loss of $1.03 per share. In the year-ago quarter, the company had recorded income of $3.20 per share.
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-eps-surprise-chart | Everest Re Group, Ltd. Quote
Operational Update
Everest Re’s total operating revenues of $2.6 billion increased 20.7% year over year.
Gross written premiums improved 12.9% year over year to $2.7 billion. The company’s worldwide reinsurance premiums increased 12% year over year to $1.8 billion, driven by new business opportunities, growth with existing customers, and improved rates and terms and conditions. Direct insurance premiums increased 15% to $871.9 million, driven primarily by new business opportunities, strong renewal retention, and rate improvement.
Net investment income came in at $222 million in the quarter under review, up 52.2% year over year.
Total claims and expenses increased 32.4% to $2.6 billion due to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses, corporate expenses, interest, fees and bond issue cost amortization expense.
Underwriting loss was $218.7 million, much wider than the year-ago underwriting loss of $28.8 million. The Reinsurance segment incurred an underwriting loss of $224.7 million, wider than the year-ago underwriting loss of $54.9 million while underwriting income in the Insurance segment decreased 77.3% to $5.9 million.
Combined ratio deteriorated 760 basis points to 109.1%. Combined ratio deteriorated 850 bps to 112.4% in the Reinsurance segment while the same deteriorated 390 bps to 99% in the Insurance segment.
Pre-tax catastrophe losses were $70 million, which decreased 68.9% from the year-ago quarter.
Financial Update
Everest Re exited the quarter with total investments and cash worth $ 25.5 billion, up 22.7% from the 2019-end level.
Shareholder equity at the end of the reported quarter increased 6.5% from the figure at 2019 end to $9.7 billion.
Annualized net income return on equity was 2.8% in the quarter under review.
Everest Re’s cash flow from operations was $2.9 billion in 2020, up from $1.9 billion in 2019.
The company repurchased no common shares in the quarter.
Full-Year Update
For the full year, gross written premiums were $10.4 billion, up 14.8% year over year. In 2020, Everest Re delivered operating income of $7.46 per share, declining 65% year over year.
Zacks Rank
Everest Re currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Fourth-quarter earnings of Chubb Limited (CB - Free Report) , Reinsurance Group of America (RGA - Free Report) , and Markel Corporation (MKL - Free Report) beat the respective Zacks Consensus Estimate.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>