Everest Re Gains on Lower Costs

Zacks

Everest Re Group Ltd. (RE) reported fourth quarter 2012 operating earnings of 80 cents per share, substantially beating the Zacks Consensus Estimate of 50 cents. The company reported an operating loss of 94 cents per share in the year-ago quarter.

Including after tax net realized capital gains and loss, the company reported net income of $1.13 per share against 76 cents per share reported in the year-ago quarter.

For the full year 2012 operating earnings was $13.62 per share, compared to an operating loss of $1.73 per share in the year ago period.

Operational Update

Total revenue for the quarter came in at $1.27 billion, down 1% year over year.

Gross written premiums were up 4% year over year to $1.15 billion, attributable largely to the acquisition of Heartland.

Net investment income increased 16% over the prior-year quarter to $146.4 million.

Total claims and expenses were down 7% year over year to $1.23 billion, primarily due to lower incurred losses and loss adjustment expenses.

The combined ratio was 108.4% compared with 130.3% in the three-year ago period.

Segment Results

The company’s Insurance segment reported net premium written of $271.6 million, up 20.5% year over year. The segment reported underwriting loss of $45.6 million, lower than an underwriting loss of $72.2 million in the year-ago quarter. Combined ratio was 118.9%, compared with 140.3% in the year-ago quarter.

The Reinsurance segment reported premium written of $874.2 million, up 5.8% year over year. However, the segment reported an underwriting loss of $48.0 million, lower than an underwriting loss of $232.8 million in the year-ago quarter. Combined ratio improved to 105.5% from 128.2% in the comparable quarter last year.

Financial update

Shareholders’ equity as of the end of the reported quarter was $6.7 billion, up 11% from the $6.1 billion at Dec 31, 2011.

Book value per share increased 16% from $112.99 as on Dec 31, 2011 to $130.96 as of Dec 31, 2012.

Share Repurchase Update

During the quarter under review, Everest Re spent $40 million to buyback 370,939 shares.

Everest Re currently retains a Zacks Rank #3 (Hold).  Other players from the same industry such as RLI Corp. (RLI), The Travelers Companies, Inc. (TRV) both carrying Zacks Rank #1 (Buy) and The Allstate Corp. (ALL) with Zacks Rank #2 (Buy), have all reported earnings ahead of the Zacks Consensus Estimate.

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