Everest Re Group, Ltd. RE reported third-quarter 2020 operating net income per share of $2.42, missing the Zacks Consensus Estimate by 13.9%. The bottom line also declined 28.6% year over year.
The quarter witnessed higher premiums across its Reinsurance and Insurance businesses, and increased net investment income, offset by elevated expenses.
Everest Re Group, Ltd. Price, Consensus and EPS Surprise
Everest Re Group, Ltd. price-consensus-eps-surprise-chart | Everest Re Group, Ltd. Quote
Everest Re’s total operating revenues of $2.5 billion increased 21.5% year over year on higher premiums earned.
Gross written premiums improved 16.2% year over year to $2.8 billion. In the Reinsurance segment, gross written premiums grew 20% year over year to $2.1 billion while in the Insurance segment, the same increased 6% year over year to $705 million.
Net investment income was $234 million in the quarter under review, up 29.4% year over year due to limited partnership gains of $88.8 million.
Total claims and expenses increased 19.9% to $2.3 billion, primarily due to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses and corporate expenses.
Underwriting loss was $114.6 million, wider than the year-over-year underwriting loss $27.5 million. Reinsurance segment incurred an underwriting loss of $90.4 million, wider than the year-over-year underwriting loss of $44.7 million while the Insurance segment incurred an underwriting loss of $24.2 million against the year-ago profit of $17.2 million.
Combined ratio deteriorated 380 basis points (bps) to 105.2%. Excluding the catastrophe and Covid-19 pandemic losses, attritional combined ratio was 85.8%, improving 130 bps from the prior-year period.
Pre-tax catastrophe losses were $300 million, net of reinsurance and reinstatement premiums, which grew 7.1% from the year-ago quarter. These losses include the impact of hurricanes Laura, Isaias and Sally, wildfires in California and Oregon, and other events including the Midwest US Derecho windstorm.
Combined ratio deteriorated 230 bps to 105.4% in the Reinsurance segment while the same worsened 810 bps to 104.5% in the Insurance segment.
Everest Re exited the quarter with total investments and cash worth $23.1 billion, up 11.3% from the 2019-end level. Shareholder equity at the end of the reported quarter increased 5% from the level at 2019 end to $9.6 billion.
Book value per share was $239.98 as of Sep 30, 2020, up 9.3% on a dividend adjusted basis from the level at 2019 end.
Annualized net income return on equity was 11%, reflecting an expansion of 620 bps from the year-ago period.
Everest Re’s cash flow from operations was $1.1 billion in the third quarter, up 71.5% year over year.
The company paid common share dividends of $61.9 million during the quarter.
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
Third-quarter earnings of Willis Towers Watson Public Limited Company WLTW, AXIS Capital Holdings Limited AXS, Markel Corporation MKL beat the respective Zacks Consensus Estimate.
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