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Why Is Everest Group (EG) Up 6.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Everest Group (EG - Free Report) . Shares have added about 6.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Everest Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Everest Q3 Earnings Top on Solid Segmental Results
Everest Group, Ltd.’s third-quarter 2023 operating income per share of $14.14 beat the Zacks Consensus Estimate by 39%. The bottom line rebounded from the year-ago loss of $5.28.
Everest Group witnessed higher premiums across its reinsurance and insurance businesses, improved net investment income and underwriting income and lower expenses.
Operational Update
Everest Group’s total operating revenues of nearly $4 billion increased 25.6% year over year on higher premiums earned and net investment income. The top line beat the consensus mark by 4.9%.
Gross written premiums improved 19.3% year over year to $4.4 billion, driven by 32.7% growth in Reinsurance and 3.5% growth in Insurance. Our estimate was $4.1 billion.
Net investment income was $406 million, more than double year over year. The upside was driven by strong fixed income and alternative investment returns. Our estimate was $238.5 million. The Zacks Consensus Estimate was pegged at $339 million.
Total claims and expenses decreased 6% to $3.3 billion, primarily due to lower incurred losses and loss adjustment expenses. Our estimate was $3.5 billion.
Pre-tax underwriting income was $301 million, rebounding from the year-ago loss of $367 million. Pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums were $170 million, narrower than $730 million in the year-ago quarter.
The combined ratio improved 2050 basis points (bps) year over year to 91.4 in the reported quarter. The Zacks Consensus Estimate was 95, while our estimate was 95.6.
Segment Update
The Reinsurance segment gross written premiums were a record $3.2 billion, up 32.7% year over year. The increase was driven by 43.9% growth in property pro-rata, 41.2% growth in property Cat, 28.8% growth in Casualty XOL and 19.9% in Casualty pro-rata as pricing increased. Our estimate was $2.8 billion.
The combined ratio of the Reinsurance segment improved 2400 bps to 91. Our estimate was 97.4. The Zacks Consensus estimate was 96.
The Insurance segment generated gross written premiums of record $1.2 billion, up 3.5% year over year, driven by a diversified mix of property and specialty lines. Our estimate was $1.3 billion.
The combined ratio improved 1090 bps to 92.6 for the Insurance segment. Our estimate was 90.8. The Zacks Consensus Estimate was 95.
Financial Update
Everest Group exited the third quarter of 2023 with total investments and cash of $34.6 billion, up 15.7% from the 2022 level. Shareholder equity at the end of the reported quarter increased 33.3% from the figure at 2022 end to $11.2 billion.
Book value per share was $251.17 as of Jun 30, 2023, up 20% from the 2022-end level. The annualized net income return on equity was 21.2% versus -12.9% in the year-ago quarter.
Everest Group’s cash flow from operations was $1.4 billion in the quarter, up 27.3% year over year. Everest Group paid common share dividends of $76 million during the quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Everest Group has a nice Growth Score of B, a grade with the same score on the momentum front. 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Everest Group has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Everest Group (EG) Up 6.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Everest Group (EG - Free Report) . Shares have added about 6.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Everest Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Everest Q3 Earnings Top on Solid Segmental Results
Everest Group, Ltd.’s third-quarter 2023 operating income per share of $14.14 beat the Zacks Consensus Estimate by 39%. The bottom line rebounded from the year-ago loss of $5.28.
Everest Group witnessed higher premiums across its reinsurance and insurance businesses, improved net investment income and underwriting income and lower expenses.
Operational Update
Everest Group’s total operating revenues of nearly $4 billion increased 25.6% year over year on higher premiums earned and net investment income. The top line beat the consensus mark by 4.9%.
Gross written premiums improved 19.3% year over year to $4.4 billion, driven by 32.7% growth in Reinsurance and 3.5% growth in Insurance. Our estimate was $4.1 billion.
Net investment income was $406 million, more than double year over year. The upside was driven by strong fixed income and alternative investment returns. Our estimate was $238.5 million. The Zacks Consensus Estimate was pegged at $339 million.
Total claims and expenses decreased 6% to $3.3 billion, primarily due to lower incurred losses and loss adjustment expenses. Our estimate was $3.5 billion.
Pre-tax underwriting income was $301 million, rebounding from the year-ago loss of $367 million. Pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums were $170 million, narrower than $730 million in the year-ago quarter.
The combined ratio improved 2050 basis points (bps) year over year to 91.4 in the reported quarter. The Zacks Consensus Estimate was 95, while our estimate was 95.6.
Segment Update
The Reinsurance segment gross written premiums were a record $3.2 billion, up 32.7% year over year. The increase was driven by 43.9% growth in property pro-rata, 41.2% growth in property Cat, 28.8% growth in Casualty XOL and 19.9% in Casualty pro-rata as pricing increased. Our estimate was $2.8 billion.
The combined ratio of the Reinsurance segment improved 2400 bps to 91. Our estimate was 97.4. The Zacks Consensus estimate was 96.
The Insurance segment generated gross written premiums of record $1.2 billion, up 3.5% year over year, driven by a diversified mix of property and specialty lines. Our estimate was $1.3 billion.
The combined ratio improved 1090 bps to 92.6 for the Insurance segment. Our estimate was 90.8. The Zacks Consensus Estimate was 95.
Financial Update
Everest Group exited the third quarter of 2023 with total investments and cash of $34.6 billion, up 15.7% from the 2022 level. Shareholder equity at the end of the reported quarter increased 33.3% from the figure at 2022 end to $11.2 billion.
Book value per share was $251.17 as of Jun 30, 2023, up 20% from the 2022-end level. The annualized net income return on equity was 21.2% versus -12.9% in the year-ago quarter.
Everest Group’s cash flow from operations was $1.4 billion in the quarter, up 27.3% year over year. Everest Group paid common share dividends of $76 million during the quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Everest Group has a nice Growth Score of B, a grade with the same score on the momentum front. 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Everest Group has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.