Everest Re (RE) Q2 Earnings Top Estimates, Revenues Rise Y/Y
Everest Re Group, Ltd. RE delivered second-quarter 2021 operating net income per share of $14.63, beating the Zacks Consensus Estimate by 62.6%. The bottom line increased sevenfold year over year.
The company witnessed higher premiums across its reinsurance and insurance businesses, higher net investment income as well as improved underwriting profit. It was partly offset by higher expenses.
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 nearly $2.9 billion increased 45.2% year over year on higher premiums earned and net investment income.
Gross written premiums improved 34.6% year over year to $3.2 billion. Worldwide reinsurance premiums grew 39.6% year over year at $2.1 billion. The growth was driven by the strength of the Everest global franchise. Direct insurance premiums grew 25.4% to $1 billion, primarily driven by new business in North America.
Net investment income was $407 million in the quarter under review, up more than tenfold year over year due to alternative investment gains of $266 million.
Total claims and expenses increased 15.4% to $2.3 billion primarily due to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses, interest, fees and bond issue cost amortization expense and corporate expenses.
Underwriting profit increased more than fivefold to $274 million in the quarter. Underwriting profit for the Reinsurance segment increased more than threefold to $232.3 million. Underwriting income in the Insurance segment was $41.3 million against the year-ago loss of $18.6 million.
Combined ratio improved 820 basis points (bps) to 89.3%. Excluding the pandemic’s impact, attritional combined ratio was 87.6%, improving 90 bps from the prior-year period.
Combined ratio of the Reinsurance segment improved 750 bps to 87.9% while the same improved 990 bps to 93.5% for the Insurance segment.
Pre-tax catastrophe losses were $45 million, which increased threefold from the year-ago quarter.
Financial Update
Everest Re exited the quarter with total investments and cash of $27.1 billion, up 6.3% from the 2020 level. Shareholder equity at the end of the reported quarter increased 7.1% from 2020 end to $10.4 billion.
Book value per share was $260.32 as of Jun 30, 2021, up 7% from the 2020-end level.
Annualized net income return on equity was 28.4%, reflecting an expansion of 1950 bps from the year-ago period.
Everest Re’s cash flow from operations was $723.6 million in the second quarter, up 20.9% year over year.
The company paid common share dividends of $62 million during the quarter.
The company bought back shares worth $16.8 million in the quarter.
Zacks Rank
Everest Re 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 Insurers
Among other insurance industry players, which have reported second-quarter earnings so far, the bottom line of The Progressive Corporation PGR, RLI Corp. RLI and The Travelers Companies, Inc. TRV beat the respective Zacks Consensus Estimate.
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