Everest Group (EG) Q4 Earnings Beat on Improved Premiums
Everest Group, Ltd.’s EG fourth-quarter 2023 operating income of $25.18 per share beat the Zacks Consensus Estimate by 72.1%. The bottom line doubled year over year.
Everest Group witnessed higher premiums across its reinsurance and insurance businesses and improved net investment income. Higher expenses and lower underwriting income partially offset the upside.
Everest Group, Ltd. Price, Consensus and EPS Surprise
Everest Group, Ltd. price-consensus-eps-surprise-chart | Everest Group, Ltd. Quote
Operational Update
Everest Group’s total operating revenues of nearly $3.65 billion increased 12.3% year over year on higher premiums earned and net investment income. The top line missed the consensus mark by 8.9%.
Gross written premiums improved 18.3% year over year to $4.3 billion, driven by 21.9% growth in Reinsurance and a rise of 11.6% in Insurance. Our estimate was $4 billion for the metric.
Net investment income was $411 million, which surged 96% year over year. The upside was driven by strong fixed income and alternative investment returns. Our estimate was $407.4 million for the metric. The Zacks Consensus Estimate for the same was pegged at $413 million.
Total claims and expenses jumped 26% to $3.4 billion, primarily due to higher commission, brokerage, taxes and fees, other underwriting expenses, corporate expenses and interest, fees and bond issue cost amortization expense. Our estimate was $3.2 billion for the metric.
Pre-tax underwriting income totaled $245 million, which plunged 33.4% year over year. Pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums were $143 million, wider than the reported loss of $15 million in the year-ago quarter. The loss was primarily due to Hurricane Otis.
The combined ratio deteriorated 540 basis points (bps) year over year to 93.2 in the reported quarter. The Zacks Consensus Estimate was 90 for the metric, while our estimate was 87.8.
Segment Update
The Reinsurance segment’s gross written premiums were $2.9 billion, up 21.9% year over year. The increase was driven by a rise of 39.2% in Property Pro-Rata, 23.3% in Property Catastrophe XOL and 45.2% in Property Non-Catastrophe XOL, when adjusting for reinstatement premiums, as pricing increases and a flight to quality continue globally.
The combined ratio of the Reinsurance segment improved 800 bps to 78.8. Our estimate was 88.6. The Zacks Consensus Estimate was pegged at 89.
The Insurance segment generated gross written premiums of $1.4 billion, up 11.6% year over year, driven by a diversified mix of property and specialty lines, partially offset by lower written premiums in monoline workers' compensation and financial lines.
The combined ratio deteriorated 4,190 bps to 132.4 for the Insurance segment. Our estimate was 85.3. The Zacks Consensus Estimate was pinned at 91.
Financial Update
Everest Group exited the fourth quarter of 2023 with total investments and cash of $37.1 billion, up 24.3% from the 2022 level. Shareholder equity at the end of the reported quarter increased 56.4% from the figure at 2022 end to $13.2 billion.
Book value per share was $304.29 as of Dec 31, 2023, up 41.2% from the 2022-end level. The annualized net income return on equity was 23.8%, which expanded 370 bps from the year-ago quarter.
Everest Group’s cash flow from operations was $4.5 billion in the quarter, up 23.2% year over year. The company paid common share dividends of $76 million during the quarter.
Full-Year Highlights
Full-year 2023 operating income per share of $66.39 more than doubled year over year. The bottom line beat the Zacks Consensus Estimate by 20%.
Total revenues jumped 20.9% from the year-ago quarter's level to $14.58 billion. The top line missed the Zacks Consensus Estimate by 2.5%.
Zacks Rank
Everest Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Multi-Line Insurers
The Hartford Financial Services Group, Inc. HIG reported fourth-quarter 2023 adjusted operating earnings of $3.06 per share, which surpassed the Zacks Consensus Estimate by 28%. The bottom line climbed 32% year over year. Operating revenues of HIG amounted to $4.3 billion, which improved 7.6% year over year in the quarter under review. The top line beat the consensus mark by a whisker.
Earned premiums of Hartford Financial rose 8.2% year over year to $5.43 billion in the fourth quarter, higher than the Zacks Consensus Estimate of $5.41 billion and our estimate of $5.35 billion. Pre-tax net investment income of $653 million grew 2% year over year and beat the consensus mark of $623 million but missed our estimate of $697.6 million.
MGIC Investment Corporation MTG reported fourth-quarter 2023 operating net income per share of 67 cents, which beat the Zacks Consensus Estimate by 17.5%. The bottom line improved 4.7% year over year. MGIC Investment recorded total operating revenues of $285 million, which declined 2.1% year over year on lower net premiums written, partially offset by higher net investment income. The top line missed the consensus mark by 6%.
Insurance in force declined 0.6% from the prior-year quarter to $293.5 billion. The company missed our estimate of $300.7 billion. The insurer witnessed a 2.8% decrease in primary delinquency to 25,650 loans. Net premiums written declined 5.3% year over year to $219.1 million. The figure was lower than our estimate of $235 million. Net investment income increased 24.7% year over year to $57.8 million. The company beat our estimate of $56.1 million.
MetLife, Inc. MET reported fourth-quarter 2023 adjusted operating earnings of $1.93 per share, which fell short of the Zacks Consensus Estimate by 1%. The bottom line improved 21% year over year. Adjusted operating revenues of MET climbed 21.5% year over year to $18.7 billion in the quarter under review. The top line outpaced the consensus mark by 3.6%. Adjusted premiums, fees and other revenues, excluding pension risk transfer (PRT), were $11.8 billion. The figure rose 8% year over year.
The adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, improved 60 bps year over year to 20.6% in the quarter under review. Net income of $574 million dropped 63% year over year. Adjusted return on equity, excluding accumulated other comprehensive income (loss) other than foreign currency translation adjustments, improved 170 bps year over year to 13.8%.
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