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Why Is Everest Group (EG) Up 9.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Everest Group (EG - Free Report) . Shares have added about 9.4% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Everest Group Q3 Earnings, Revenues Miss on Higher Catastrophe Loss
Everest Group, Ltd.’s third-quarter 2024 operating income of $14.62 per share missed the Zacks Consensus Estimate by 22.7%. The bottom line jumped 3.4% year over year. Everest Group witnessed above-average cat loss as well as lower premiums in Insurance. Higher premiums in Reinsurance and improved net investment income limited the downside.
Operational Update
Everest Group’s total operating revenues of $4.3 billion climbed 6.5% year over year on higher premiums earned and net investment income. The top line however missed the consensus mark by 4.4%. Gross written premiums improved 0.8% year over year to $4.2 billion, driven by 1.7% growth in Reinsurance, partially offset by a 2.1% decline in Insurance. Our estimate was $5.3 billion.
Net investment income was $496 million, which surged 22.2% year over year. The upside was driven by a larger asset base as well as strong core fixed income investment returns. Our estimate was $412 million. The Zacks Consensus Estimate was pegged at $478 million.
Total claims and expenses rose 13.5% to $3.7 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. Our estimate was $3.9 billion.
Underwriting income was $272 million, which declined 9.6% year over year. Pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums were $279 million, wider than a loss of $170 million in the year-ago quarter.
The combined ratio deteriorated 160 basis points (bps) year over year to 93.1 in the reported quarter. The Zacks Consensus Estimate was 96, while our estimate was 95.5.
Segment Update
The Reinsurance segment’s gross written premiums were $3.3 billion, up 1.7% year over year. Growth was driven by a 19.2% increase in Property and 9.3% in Property Catastrophe XOL, partially offset by a 7.2% decrease in Casualty, a 5.9% decrease in Casualty XOL and a 28.6% decrease in Financial Lines when adjusting for reinstatement premiums. Our estimate was $3.8 billion. The combined ratio of the Reinsurance segment deteriorated 70 bps to 91.8. The Zacks Consensus Estimate was 98. Our estimate was 97.1.
The Insurance segment generated gross written premiums of $1.2 billion, down 2.8% year over year. A 21% growth in Property/Short Tail and 17.7% in Other Specialty lines was offset by a decrease of 27.6% in Accident and Health, as the insurer exited the medical stop loss business, and 10.3% in Specialty Casualty, primarily in North America, reflecting its focus on lines of business with better- expected margins. Our estimate was $1.5 billion. The combined ratio deteriorated 460 bps to 97.1 for the Insurance segment. Our estimate was 92.2. The Zacks Consensus Estimate was pegged at 95.
Financial Update
Everest Group exited the third quarter of 2024 with total investments and cash of $42.1 billion, up 13.3% from the 2023-end level. Shareholder equity at the end of the reported quarter increased 16.2% from the figure at the end of 2023 to $15.3 billion. Book value per share was $356.77 as of Sept. 30, 2024, up 37.9% from the 2023-end level. The annualized net income return on equity was 16.4%, which contracted 230 bps from the year-ago quarter. Everest Group’s cash flow from operations was $1.7 billion in the quarter, up 21.4% year over year. The company paid common share dividends of $86 million during the quarter and bought back shares worth $100 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -45.6% due to these changes.
VGM Scores
Currently, Everest Group has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 B. 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 Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Everest Group (EG) Up 9.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Everest Group (EG - Free Report) . Shares have added about 9.4% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Everest Group Q3 Earnings, Revenues Miss on Higher Catastrophe Loss
Everest Group, Ltd.’s third-quarter 2024 operating income of $14.62 per share missed the Zacks Consensus Estimate by 22.7%. The bottom line jumped 3.4% year over year. Everest Group witnessed above-average cat loss as well as lower premiums in Insurance. Higher premiums in Reinsurance and improved net investment income limited the downside.
Operational Update
Everest Group’s total operating revenues of $4.3 billion climbed 6.5% year over year on higher premiums earned and net investment income. The top line however missed the consensus mark by 4.4%. Gross written premiums improved 0.8% year over year to $4.2 billion, driven by 1.7% growth in Reinsurance, partially offset by a 2.1% decline in Insurance. Our estimate was $5.3 billion.
Net investment income was $496 million, which surged 22.2% year over year. The upside was driven by a larger asset base as well as strong core fixed income investment returns. Our estimate was $412 million. The Zacks Consensus Estimate was pegged at $478 million.
Total claims and expenses rose 13.5% to $3.7 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. Our estimate was $3.9 billion.
Underwriting income was $272 million, which declined 9.6% year over year.
Pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums were $279 million, wider than a loss of $170 million in the year-ago quarter.
The combined ratio deteriorated 160 basis points (bps) year over year to 93.1 in the reported quarter. The Zacks Consensus Estimate was 96, while our estimate was 95.5.
Segment Update
The Reinsurance segment’s gross written premiums were $3.3 billion, up 1.7% year over year. Growth was driven by a 19.2% increase in Property and 9.3% in Property Catastrophe XOL, partially offset by a 7.2% decrease in Casualty, a 5.9% decrease in Casualty XOL and a 28.6% decrease in Financial Lines when adjusting for reinstatement premiums. Our estimate was $3.8 billion. The combined ratio of the Reinsurance segment deteriorated 70 bps to 91.8. The Zacks Consensus Estimate was 98. Our estimate was 97.1.
The Insurance segment generated gross written premiums of $1.2 billion, down 2.8% year over year. A 21% growth in Property/Short Tail and 17.7% in Other Specialty lines was offset by a decrease of 27.6% in Accident and Health, as the insurer exited the medical stop loss business, and 10.3% in Specialty Casualty, primarily in North America, reflecting its focus on lines of business with better- expected margins. Our estimate was $1.5 billion. The combined ratio deteriorated 460 bps to 97.1 for the Insurance segment. Our estimate was 92.2. The Zacks Consensus Estimate was pegged at 95.
Financial Update
Everest Group exited the third quarter of 2024 with total investments and cash of $42.1 billion, up 13.3% from the 2023-end level. Shareholder equity at the end of the reported quarter increased 16.2% from the figure at the end of 2023 to $15.3 billion. Book value per share was $356.77 as of Sept. 30, 2024, up 37.9% from the 2023-end level. The annualized net income return on equity was 16.4%, which contracted 230 bps from the year-ago quarter. Everest Group’s cash flow from operations was $1.7 billion in the quarter, up 21.4% year over year. The company paid common share dividends of $86 million during the quarter and bought back shares worth $100 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -45.6% due to these changes.
VGM Scores
Currently, Everest Group has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 B. 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 Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.