Everest Re Group (RE) Beats On Q4 Earnings And Revenues

Everest Re Group, Ltd. (NYSE:RE) reported fourth-quarter 2017 operating earnings of $13.48 per share, having surpassed the Zacks Consensus Estimate by a whopping 157.3%. The bottom line also substantially improved 52.7% from the year-ago quarter.

Despite 2017 being one of the costliest years in terms of catastrophe loss, Everest Re Group delivered exceptional results. Moreover, all the segments contributed to the company’s favorable performance.

Including after-tax net realized capital gains of 56 cents and the impact of the Tax Cuts and Jobs Act of 2017 (TCJA) of 20 cents, net income came in at $13.85 per share, up 52.5% from the prior-year quarter.

Full-Year Highlights

For 2017, Everest Re Group reported operating earnings per share of $9.10, declining 61.5% year over year.

Total operating revenues of $6.4 billion grew 11.5% year over year.

Operational Update

Everest Re Group’s total operating revenues of $1.8 billion increased nearly 16.8% year over year. Moreover, the top line beat the Zacks Consensus Estimate by 2.6%.

Gross written premiums grew 26% year over year to $1.9 billion. The company’s worldwide reinsurance premiums increased 17% while direct insurance premiums improved 15% for the year.

Net investment income came in at $149.1 million in the quarter, up 29.5% year over year.

Total claims and expenses declined 2.2% to $1.2 million, largely on lower incurred losses and loss adjustment expenses, corporate expenses as well as interest, fees and bond issue cost amortization expense.

The quarter suffered a catastrophe loss — net of reinstatement premiums — of $161.5 million from both Northern and Southern California wildfires. Combined ratio improved 1210 basis points (bps) to 70.0% from 82.1% in the year-ago quarter.

Financial Update

Everest Re Group exited the quarter with total assets of $23.6 billion, up about 10.6% from $21.3 billion at the end of 2016. Shareholder equity at the end of the reported quarter increased 3.6% to $8.4 billion from the level of $8 billion at 2016-end.

Total cash balance at the end of the quarter under review increased 31.8% to $635.1 million from $481.9 million at the end of 2016. Everest Re Group’s cash flow from operations was $118.5 million, having plunged nearly 72% year over year.

Book value per share came in at $204.95 as of Dec 31, 2017, up 3.8% from the 2016-end level.

Share Repurchase and Dividend Update

In the fourth quarter, the company bought back 0.2 million shares worth $50 million. Currently, the company has 1.8 million shares left under its share repurchase authorization.

During the fourth quarter, the company paid out a dividend of $1.30 per share, up 4% year over year.

Zacks Rank

Everest Re Group 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 players from the insurance industry having reported fourth-quarter earnings, the bottom line of Brown & Brown, Inc. (NYSE:BRO) , MGIC Investment Corporation (NYSE:MTG) and The Progressive Corporation (NYSE:PGR) beat the respective Zacks Consensus Estimate.

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