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Cat Loss to Hurt Everest Re Group (RE) This Earnings Season

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Everest Re Group (RE - Free Report) is slated to report first-quarter 2021 results on Apr 28, after market close. The company delivered earnings beat in two of the last four reported quarters of 2020 while missing in the other two.

Factors to Consider

Global presence, product diversification, strong renewal retention and better pricing are likely to have fueled premium increase for Everest Re in the to-be-reported quarter. The Zacks Consensus Estimate for premiums earned is pegged at $2.3 billion, indicating an increase of 15.1% from the year-ago reported figure.

The Insurance segment is likely to have benefited from product diversification, staffing up of underwriting operations, international insurance growth and ramp up of Canadian and European platforms. The Zacks Consensus Estimate for net premiums written is pegged at $647 million.

The Reinsurance segment is likely to have been aided by growth initiatives including deployment of increased capacity to pro-rata deal. The Zacks Consensus Estimate for net premiums written is pegged at $1.8 billion.

Net investment income is likely to have benefited from higher income from fixed income portfolio, increase in limited partnership income, higher dividend income from equity portfolio, and increased income from other invested assets. The Zacks Consensus Estimate for net investment income is pegged at $196 million, indicating an upside of 32.4% from the year-ago reported figure.

The company projects pre-tax catastrophe loss of $260 million, net of reinsurance recoveries and reinstatement premiums, primarily due to Texas winter storms and New South Wales flooding. The Reinsurance segment is estimated to absorb $203 million cat loss from Texas winter storms and $10 million from New South Wales flooding. The Insurance segment is estimated to absorb $47 million cat loss from Texas winter storms.

Nonetheless, the Zacks Consensus Estimate for Insurance segment combined ratio is pegged at 101, implying an improvement of 300 basis points from the year-ago period reported figure. The consensus estimate for Reinsurance segment combined ratio is pegged at 97. The consensus estimate for consolidated combined ratio is pegged at 98, an improvement of 100 basis points.

The Zacks Consensus Estimate for the first quarter is pegged at $4.59, a 13.9% rise from the year-ago reported quarter.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Everest Re this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case as you can see below.

Earnings ESP: Everest Re has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $4.59. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
 

Everest Re Group, Ltd. Price and EPS Surprise

Everest Re Group, Ltd. Price and EPS Surprise

Everest Re Group, Ltd. price-eps-surprise | Everest Re Group, Ltd. Quote

Zacks Rank: Everest Re currently carries a Zacks Rank of 3.

Stocks to Consider

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +2.67% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Palomar Holdings (PLMR - Free Report) has an Earnings ESP of +6.93% and a Zacks Rank #3.

American International (AIG - Free Report) has an Earnings ESP of +0.23% and a Zacks Rank of 3.

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