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Why Is Everest Re (RE) Down 1.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Everest Re . Shares have lost about 1.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Everest Re due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Everest Re Q1 Earnings Top, Revenues Lag Estimates
Everest Re Group, Ltd.’s first-quarter 2022 operating income per share of $10.31 beat the Zacks Consensus Estimate by 23.9%. The bottom line increased 58.9% year over year.
Everest Re witnessed higher premiums across its reinsurance and insurance businesses. A not-so-active cat environment aided underwriting income, driving the combined ratio.
Operational Update
Everest Re’s total operating revenues of nearly $3.1 billion increased 14.8% year over year on higher premiums earned. The top line, however, missed the consensus estimate by 2.6%.
Gross written premiums improved 9% year over year to $3.2 billion. The Reinsurance segment generated premiums of $2.2 billion, up 6% year over year, including a highly successful Jan 1 renewal where Everest achieved growth in targeted classes, notably casualty pro-rata and international treaty, while optimizing the property portfolio to reduce catastrophe volatility and maximize returns. The Insurance segment generated a premium of $1 billion, up 15% year over year, driven by balanced and diversified growth across core classes and geographies.
Net investment income was $242.8 million, down 6.8% year over year. Total claims and expenses increased 9.4% to $2.6 billion primarily due to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses, corporate expenses and interest, fees and bond issue cost amortization expense.
Pre-tax underwriting income was $235 million including $115 million of catastrophe losses net of recoveries and reinstatement premiums. Catastrophe events comprised Australian flood losses, European storms, and March 2022 events in the United States.
The combined ratio improved 650 basis points (bps) year over year to 91.6 in the reported quarter. The combined ratio of the Reinsurance segment improved 610 bps to 91.4 while the same improved 800 bps to 91.9 for the Insurance segment.
Financial Update
Everest Re exited the first quarter of 2022 with total investments and cash of $29.3 billion, down 1.2% from the 2021 level. Shareholder equity at the end of the reported quarter decreased 6% from 2021 end to $9.5 billion. Book value per share was $241.52 as of Mar 31, 2022, down 6.4% from the 2021-end level.
The annualized net income return on equity was 16.2%, up 480 bps. Everest Re’s cash flow from operations was $846.4 million in the quarter, down 6.4% year over year.
Everest Re paid common share dividends of $61 million during the quarter and bought back shares worth $1.3 million in the first quarter of 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -11.96% due to these changes.
VGM Scores
Currently, Everest Re has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Everest Re has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Everest Re is part of the Zacks Insurance - Property and Casualty industry. Over the past month, Progressive (PGR - Free Report) , a stock from the same industry, has gained 5.8%. The company reported its results for the quarter ended March 2022 more than a month ago.
Progressive reported revenues of $12.29 billion in the last reported quarter, representing a year-over-year change of +13.1%. EPS of $1.12 for the same period compares with $1.72 a year ago.
For the current quarter, Progressive is expected to post earnings of $0.99 per share, indicating a change of -34.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +3.2% over the last 30 days.
Progressive has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Why Is Everest Re (RE) Down 1.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Everest Re . Shares have lost about 1.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Everest Re due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Everest Re Q1 Earnings Top, Revenues Lag Estimates
Everest Re Group, Ltd.’s first-quarter 2022 operating income per share of $10.31 beat the Zacks Consensus Estimate by 23.9%. The bottom line increased 58.9% year over year.
Everest Re witnessed higher premiums across its reinsurance and insurance businesses. A not-so-active cat environment aided underwriting income, driving the combined ratio.
Operational Update
Everest Re’s total operating revenues of nearly $3.1 billion increased 14.8% year over year on higher premiums earned. The top line, however, missed the consensus estimate by 2.6%.
Gross written premiums improved 9% year over year to $3.2 billion. The Reinsurance segment generated premiums of $2.2 billion, up 6% year over year, including a highly successful Jan 1 renewal where Everest achieved growth in targeted classes, notably casualty pro-rata and international treaty, while optimizing the property portfolio to reduce catastrophe volatility and maximize returns. The Insurance segment generated a premium of $1 billion, up 15% year over year, driven by balanced and diversified growth across core classes and geographies.
Net investment income was $242.8 million, down 6.8% year over year. Total claims and expenses increased 9.4% to $2.6 billion primarily due to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses, corporate expenses and interest, fees and bond issue cost amortization expense.
Pre-tax underwriting income was $235 million including $115 million of catastrophe losses net of recoveries and reinstatement premiums. Catastrophe events comprised Australian flood losses, European storms, and March 2022 events in the United States.
The combined ratio improved 650 basis points (bps) year over year to 91.6 in the reported quarter. The combined ratio of the Reinsurance segment improved 610 bps to 91.4 while the same improved 800 bps to 91.9 for the Insurance segment.
Financial Update
Everest Re exited the first quarter of 2022 with total investments and cash of $29.3 billion, down 1.2% from the 2021 level. Shareholder equity at the end of the reported quarter decreased 6% from 2021 end to $9.5 billion. Book value per share was $241.52 as of Mar 31, 2022, down 6.4% from the 2021-end level.
The annualized net income return on equity was 16.2%, up 480 bps. Everest Re’s cash flow from operations was $846.4 million in the quarter, down 6.4% year over year.
Everest Re paid common share dividends of $61 million during the quarter and bought back shares worth $1.3 million in the first quarter of 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -11.96% due to these changes.
VGM Scores
Currently, Everest Re has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Everest Re has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Everest Re is part of the Zacks Insurance - Property and Casualty industry. Over the past month, Progressive (PGR - Free Report) , a stock from the same industry, has gained 5.8%. The company reported its results for the quarter ended March 2022 more than a month ago.
Progressive reported revenues of $12.29 billion in the last reported quarter, representing a year-over-year change of +13.1%. EPS of $1.12 for the same period compares with $1.72 a year ago.
For the current quarter, Progressive is expected to post earnings of $0.99 per share, indicating a change of -34.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +3.2% over the last 30 days.
Progressive has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.