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Everest Re's (RE) Q3 Earnings Beat Despite High Cat Loss
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Everest Re Group, Ltd.’s third-quarter 2022 operating loss per share of $5.28 was narrower than the Zacks Consensus Estimate of a loss of $5.89 but wider than the year-ago loss of $1.34.
Everest Re witnessed higher premiums across its reinsurance and insurance businesses. RE noted that its diversification strategy and underwriting discipline were key to mitigating exposure to one of the industry’s largest hurricane losses in U.S. history.
Everest Re Group, Ltd. Price, Consensus and EPS Surprise
Everest Re’s total operating revenues of $3.2 billion increased 9.5% year over year on higher premiums earned. The top line, however, missed the consensus estimate by 2.2%.
Gross written premiums improved 6.3% year over year to $3.7 billion, largely driven by double-digit growth in the Insurance segment. However, it missed and our estimate of $$3.9 billion
The Reinsurance segment generated premiums of $2.6 billion, up 3.4% year over year, driven by casualty lines and continued international expansion, which were offset by targeted reductions in property and headwinds from a stronger dollar.
The Insurance segment generated a premium of $1.1 billion, up 13.1% year over year, driven by balanced and strong diversified growth across most lines of business and geographies.
Net investment income was $151 million, down 48.5% year over year. Stronger fixed-income returns as new money yields continued to improve partially, offset by volatile equity markets and a lag in private equity reporting.
Total claims and expenses increased 15.3% to $3.5 billion, primarily due to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses, and interest, fees and bond issue cost amortization expenses. Our estimate was $3.1 billion.
Pre-tax underwriting loss of $367 million includes $730 million of pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums as previously announced. The losses were primarily from Hurricane Ian and other events, including European Hailstorms, Hurricane Fiona and Typhoon Nanmadol.
The combined ratio deteriorated 1320 basis points (bps) year over year to 112 in the reported quarter. The combined ratio of the Reinsurance segment deteriorated 1520 bps to 115 while the same deteriorated 760 bps to 103.5 for the Insurance segment.
Financial Update
Everest Re exited the third quarter of 2022 with total investments and cash of $28.5 billion, down 3.9% from the 2021 level. Shareholder equity at the end of the reported quarter decreased 24.6% from 2021 end to $7.6 billion.
Book value per share was $195.27 as of Sep 30, 2022, down 19.7% year over year.
The annualized net income return on equity was -8.3% versus -2.3% in the year-ago quarter.
Everest Re’s cash flow from operations was 1.1 billion in the quarter, flat year over year.
Everest Re bought back shares worth $58 million during the quarter.
Zacks Rank
Everest Re currently carries a Zacks Rank #4 (Sell).
Of the insurance industry players that have reported third-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers’ third-quarter 2022 core income of $2.20 per share beat the Zacks Consensus Estimate by 24.3% but decreased 15.4% year over year. Total revenues increased 6.8% from the year-ago quarter to $9.4 billion and beat the Zacks Consensus Estimate by 2.5%.
Net written premiums increased 110% year over year to $9.2 billion. Underwriting gain of $115 million increased 53.3% year over year in the reported quarter. The combined ratio improved 40 bps year over year to 98.2.
RLI’s third-quarter 2022 operating earnings of 50 cents per share beat the Zacks Consensus Estimate by 51.5% but declined 23.1% from the prior-year quarter. Operating revenues were $312.7 million, up 15.3% year over year but missed the Zacks Consensus Estimate by 1.3%.
Gross premiums written increased 13.3% year over year to $403.8 million. Underwriting income of $8.8 million decreased 35.8% while the combined ratio deteriorated 240 bps year over year to 97.
Progressive’s earnings per share of 49 cents missed the Zacks Consensus Estimate of $1.24 as well as our estimate of $1.38. The bottom line, however, improved more than threefold from 14 cents earned in the year-ago quarter.
Net premiums written were $13 billion in the quarter, up 5% from $11.7 billion a year ago but missed our estimate of $14.2 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 120 bps from the prior-year quarter’s level to 99.2.
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Everest Re's (RE) Q3 Earnings Beat Despite High Cat Loss
Everest Re Group, Ltd.’s third-quarter 2022 operating loss per share of $5.28 was narrower than the Zacks Consensus Estimate of a loss of $5.89 but wider than the year-ago loss of $1.34.
Everest Re witnessed higher premiums across its reinsurance and insurance businesses. RE noted that its diversification strategy and underwriting discipline were key to mitigating exposure to one of the industry’s largest hurricane losses in U.S. history.
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 $3.2 billion increased 9.5% year over year on higher premiums earned. The top line, however, missed the consensus estimate by 2.2%.
Gross written premiums improved 6.3% year over year to $3.7 billion, largely driven by double-digit growth in the Insurance segment. However, it missed and our estimate of $$3.9 billion
The Reinsurance segment generated premiums of $2.6 billion, up 3.4% year over year, driven by casualty lines and continued international expansion, which were offset by targeted reductions in property and headwinds from a stronger dollar.
The Insurance segment generated a premium of $1.1 billion, up 13.1% year over year, driven by balanced and strong diversified growth across most lines of business and geographies.
Net investment income was $151 million, down 48.5% year over year. Stronger fixed-income returns as new money yields continued to improve partially, offset by volatile equity markets and a lag in private equity reporting.
Total claims and expenses increased 15.3% to $3.5 billion, primarily due to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses, and interest, fees and bond issue cost amortization expenses. Our estimate was $3.1 billion.
Pre-tax underwriting loss of $367 million includes $730 million of pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums as previously announced. The losses were primarily from Hurricane Ian and other events, including European Hailstorms, Hurricane Fiona and Typhoon Nanmadol.
The combined ratio deteriorated 1320 basis points (bps) year over year to 112 in the reported quarter. The combined ratio of the Reinsurance segment deteriorated 1520 bps to 115 while the same deteriorated 760 bps to 103.5 for the Insurance segment.
Financial Update
Everest Re exited the third quarter of 2022 with total investments and cash of $28.5 billion, down 3.9% from the 2021 level. Shareholder equity at the end of the reported quarter decreased 24.6% from 2021 end to $7.6 billion.
Book value per share was $195.27 as of Sep 30, 2022, down 19.7% year over year.
The annualized net income return on equity was -8.3% versus -2.3% in the year-ago quarter.
Everest Re’s cash flow from operations was 1.1 billion in the quarter, flat year over year.
Everest Re bought back shares worth $58 million during the quarter.
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 Some Other P&C Insurers
Of the insurance industry players that have reported third-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers’ third-quarter 2022 core income of $2.20 per share beat the Zacks Consensus Estimate by 24.3% but decreased 15.4% year over year. Total revenues increased 6.8% from the year-ago quarter to $9.4 billion and beat the Zacks Consensus Estimate by 2.5%.
Net written premiums increased 110% year over year to $9.2 billion. Underwriting gain of $115 million increased 53.3% year over year in the reported quarter. The combined ratio improved 40 bps year over year to 98.2.
RLI’s third-quarter 2022 operating earnings of 50 cents per share beat the Zacks Consensus Estimate by 51.5% but declined 23.1% from the prior-year quarter. Operating revenues were $312.7 million, up 15.3% year over year but missed the Zacks Consensus Estimate by 1.3%.
Gross premiums written increased 13.3% year over year to $403.8 million. Underwriting income of $8.8 million decreased 35.8% while the combined ratio deteriorated 240 bps year over year to 97.
Progressive’s earnings per share of 49 cents missed the Zacks Consensus Estimate of $1.24 as well as our estimate of $1.38. The bottom line, however, improved more than threefold from 14 cents earned in the year-ago quarter.
Net premiums written were $13 billion in the quarter, up 5% from $11.7 billion a year ago but missed our estimate of $14.2 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 120 bps from the prior-year quarter’s level to 99.2.