Everest Re Group Ltd. reported third-quarter 2014 operating
earnings of $6.12 per share, way ahead of the Zacks Consensus
Estimate of $4.97. Earnings were up 45.7% year over year. Several
strategic initiatives and significantly higher underwriting income
boosted year-over-year results. Additionally, the company has a
strong balance sheet profile, a seasoned management team and huge
market share in the insurance and reinsurance industry. Everest Re
is witnessing improving rates in its insurance business. The
company's overseas business is also performing well and the trend
is expected to continue in the future. Everest Re's 10-year average
combined ratio has remained below the break-even level, leading to
underwriting profitability. It has also been generating stable cash
flows from operations. However, the company has exposure to
catastrophes that lend volatility to its earnings. Also, declining
net investment income due to a low interest rate environment, and
decreasing limited partnership income and low reinsurance rates
remain concerns. We presently have a Neutral recommendation on
Based in Hamilton, Bermuda, Everest Re Group Ltd. writes
property and casualty (P&C), reinsurance and insurance in the
United States, Bermuda and international markets. The company also
offers other innovative products like excess and surplus lines of
insurance. Everest Re virtually underwrites all classes and
categories of business in treaty, facultative, and specialty lines
both through brokers and directly with ceding companies.
Incorporated in 1999 as a wholly owned subsidiary of Everest
Reinsurance Holdings, Everest Re Group, Ltd. now operates as the
parent company. However, Everest Reinsurance Holdings continues to
be the parent organization for the company's U.S. based operations.
The company is rated 'A+' by both A.M. Best and S&P.
In the beginning of the third quarter of 2011, Everest Re
consolidated its Specialty segment partly with the Insurance
segment and partly with Reinsurance. The company now reports
primary accident and health (A&H) as part of Insurance, while
A&H Reinsurance, Surety and Marine & Aviation are now in
the U.S. Reinsurance segment.
Reinsurance (generated 78% of net premium written in 2013) This
segment writes property and casualty reinsurance on both a treaty
and a facultative basis, through reinsurance brokers as well as
directly with ceding companies within the U.S. It also includes
marine, aviation as well as surety business within the U.S. and
worldwide through brokers and directly with ceding companies.
Insurance (22%) This segment writes property and casualty
insurance primarily through general agents and surplus lines
brokers within the U.S. One-third of this business comprises
short-tail specialty components led by Heartland, its Crop
Insurance Company. Another third of the business is workers'
compensation, mostly for California workers. Approximately 15% of
the U.S insurance segment comprises Director s & Officer s
insurance written out of New York and Canada, and the remaining 20%
of the segment s book is general casualty. It also includes
accident and health (A&H) business.
Mt. Logan Re is the special purpose reinsurer formed in early
2013 to provide collateralized capacity to the worldwide property
catastrophe reinsurance market.
Everest Re Group operates through the following
Everest Reinsurance Company provides reinsurance to property and
casualty insurers in both the U.S. and international markets.
Everest Reinsurance (Bermuda) Ltd., along with its branch in the
United Kingdom, provides reinsurance and insurance to worldwide
property and casualty markets as well as to life insurers. Everest
Reinsurance Company (Ireland) Limited provides reinsurance to
non-life insurers in Europe. Everest National Insurance Company and
Everest Security Insurance Company provide property and casualty
insurance to policyholders in the U.S. Everest Indemnity Insurance
Company offers excess and surplus lines insurance in the U.S.
As of Dec 31, 2013, shareholders' equity was $7.0 billion, up
3.5% from $6.7 billion at year-end 2012.
Everest Re Group Ltd. (RE): Read the Full Research
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