Everest Re Group Ltd (NYSE:RE) reported second-quarter 2017 operating earnings of $5.51 per share that outpaced the Zacks Consensus Estimate of $5.30 by nearly 4%. The bottom line also improved about 74% from the prior-year quarter.
Everest Re Group, Ltd. Price, Consensus and EPS Surprise
Premiums improved on the back of higher premiums written in both Insurance and well as Reinsurance segments. While expenses increased, combined ratio exhibited improvement. Everest Re Group noted strong momentum across its underwriting operations, with opportunities in both reinsurance and insurance.
Including net realized capital gains of 44 cents, net income came in at $5.95 per share, improving 62.1% year over year.
Operational Update
Everest Re Group’s total operating revenue of $1.5 million increased nearly 7% year over year. Revenues beat the Zacks Consensus Estimate of $1.4 million.
Gross written premiums grew 17% year over year to $1.6 billion. The company’s worldwide reinsurance premiums increased 14% primarily due to the new crop reinsurance transaction and growth in financial lines premium. Insurance premiums also improved 25% due to continued growth in new initiatives.
Net investment income came in at $134.5 million in the quarter, up 1% year over year.
Total claims and expenses increased 1% year over year to $1.2 million. Higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, and higher underwriting expenses were responsible for the rise.
Combined ratio improved 460 (basis points) bps. Excluding catastrophe losses from the Australian windstorm, reinstatement premiums, and prior-year loss development, combined ratio deteriorated 60 bps year over year to 86.7%.
Financial Update
Everest Re Group exited the quarter with total assets of $22.5 billion, up about 6% from $21.3 billion at the end of 2016. Shareholder equity at the end of the reported quarter rose 6% to $8.5 billion from the 2016-end level of $8 billion.
Total cash balance at the end of the quarter declined 3% to $469.2 million from $481.9 million at the end of 2016. Everest Re Group's cash flow from operations was $252.6 million, down 18% year on year.
Book value per share increased 6% to $209.05 as of Jun 30, 2017 from $197.45 as of Dec 31, 2016.
Return on equity was 13% in the quarter.
Dividend Update
The company paid out a dividend of $1.25 per share in the quarter, up a dime year over year.
Zacks Rank
Currently, Everest Re holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Insurers
Among other players from the insurance industry that have reported their second-quarter earnings results so far, the bottom line at Brown & Brown, Inc. (NYSE:BRO) and Fidelity National Financial, Inc. (NYSE:FNF) beat their respective Zacks Consensus Estimate, while The Progressive Corporation (NYSE:PGR) missed the same.
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