What's in the Cards for Everest Re (RE) in Q3 Earnings?
Everest Re Group, Ltd. RE is slated to report third-quarter 2022 earnings on Oct 26, after market close. The insurer delivered an earnings surprise of 7.94% in the last reported quarter.
Factors to Consider
Premium growth is likely to have been driven by an increase in the reinsurance business and insurance business.
The Insurance segment is likely to have benefited from increases across all lines of business, notably specialty casualty business, professional liability business and other specialty businesses, strong renewal retention and a positive rate in excess of loss trend across the portfolio.
The Reinsurance segment is likely to have benefited from solid growth in international operations, increases in property catastrophe, excess of loss business and casualty pro rata business. The upside is likely to have been partially offset by a decline in property pro rata business.
The Zacks Consensus Estimate for premiums earned is pegged at $3 billion, indicating an increase of 13.4% from the year-ago reported figure. We expect net premiums earned to be $2.9 billion.
Higher net written premiums are likely to have boosted the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $3.2 billion, indicating a 10.3% increase from the year-ago reported figure. We expect revenues to be $3.2 billion.
Net investment income is likely to have been affected by a decline in limited partnership income. The downside is likely to have been partially offset by an additional income from fixed-maturity investments. The Zacks Consensus Estimate for net investment income is pegged at $224 million, indicating a decline of 23.5% from the year-ago reported figure. We expect net investment income to be $319.9 million.
Everest Re estimates a preliminary catastrophe loss of $730 million pre-tax. The estimated losses are net of estimated recoveries and reinstatement premiums. The loss is expected to primarily stem from Hurricane Ian and other global catastrophe events.
Everest Re’s Reinsurance segment is estimated to absorb $500 million cat loss from Hurricane Ian and $120 million from all other catastrophe incidents. The Insurance segment is estimated to absorb $100 million cat loss from Hurricane Ian and $10 million loss from other catastrophe events.
Everest Re’s active catastrophe management process that deploys modeling and establishes risk limits to control catastrophic exposure on both a probable maximum loss and aggregate basis is expected to have provided some respite. Rate increase, exposure growth, prudent underwriting, traditional risk management capabilities are likely to have favored the combined ratio in the to-be-reported quarter. The consensus estimate for the combined ratio is pegged at 105, indicating an improvement of 700 basis points from the year-ago reported number. We expect the combined ratio to be 104.6 for the to-be-reported quarter.
The consensus estimate for the Reinsurance segment combined ratio is pegged at 97, indicating an improvement of 1900 basis points. The consensus estimate for the Insurance segment combined ratio is pegged at 99, implying an improvement of 400 basis points.
The Zacks Consensus Estimate for Everest Re’s third-quarter earnings is currently pegged at a loss of $6.38, indicating a decline of 376.1% from the year-ago quarter reported figure. We expect the bottom line to be $2.69 per share for the to-be-reported quarter.
What the Zacks Model Says
Our proven model does not conclusively predict an earnings beat for Everest Re this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). That is not the case here.
Earnings ESP: Everest Re has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at a loss of $6.38. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Everest Re Group, Ltd. Price and EPS Surprise
Everest Re Group, Ltd. price-eps-surprise | Everest Re Group, Ltd. Quote
Zacks Rank: Everest Re carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Some insurance stocks with the right combination of elements to deliver an earnings beat this time around are:
CNO Financial Group, Inc. CNO has an Earnings ESP of +1.72% and a Zacks Rank of 3. The Zacks Consensus Estimate for third-quarter 2022 earnings is pegged at 49 cents, indicating a decrease of 31.9% from the year-ago reported figure.
CNO Financial beat earnings estimates in three of the last four reported quarters while missing the same in one.
EverQuote, Inc. EVER has an Earnings ESP of +8.21% and a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter 2022 earnings is pegged at a loss of 41 cents, down 127.8% from the figure reported in the year-ago quarter.
EverQuote beat earnings estimates in three of the last four reported quarters while missing the same in one.
Horace Mann Educators Corporation HMN has an Earnings ESP of +28.21% and a Zacks Rank of 2. The Zacks Consensus Estimate for third-quarter 2022 earnings stands at 59 cents, indicating an increase of 18% from the year-ago reported figure.
Horace Mann beat earnings estimates in three of the last four reported quarters while missing the same in one.
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CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
EverQuote, Inc. (EVER) : Free Stock Analysis Report
Horace Mann Educators Corporation (HMN) : Free Stock Analysis Report
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