Everest Re Group (RE) Q4 Earnings, Revenues Beat Estimates

Everest Re Group Ltd .'s RE reported fourth-quarter 2016 operating earnings of $8.83 per share crushed the Zacks Consensus Estimate of $3.98 by 121.9%. The bottom line also improved 8.1% from the prior-year quarter.

The insurer delivered record quarterly results with substantial increase in premiums and investment income. Both return on equity and book value per share were robust. The company is well poised to generate above-average returns for its shareholders.

Including net realized capital gain of 25 cents per share, the company's net income increased 10.7% year over year to $9.08 per share.

Operational Update

Everest Re Group's total operating revenue of $1.6 billion increased nearly 7% year over year. However, revenues outpaced the Zacks Consensus Estimate of $1.4 billion.

Gross written premiums grew 3% year over year to $1.5 billion. Excluding foreign currency fluctuations, premiums were up 4% in the reported quarter.

Net investment income came in at $115.2 million in the quarter, up 4.3% year over year.

Total claims and expenses increased 9.1% year over year to $1.2 billion. Higher incurred losses and loss adjustment expenses and underwriting expenses were responsible for the increase.

Combined ratio deteriorated 320 basis points (bps) year over year in the fourth quarter to 82.1%. Though the quarter benefitted from net prior-year reserve releases of $204.9 million and a net reduction to prior-year catastrophe loss estimates of $18.4 million, catastrophe losses of $168.6 million stemming from Hurricane Matthew, the New Zealand earthquake, and the Tennessee wildfires acted as dampeners.

2016 Highlights

Earnings per share of $23.61 decreased 5.7% year over year. Operating revenues of $5.8 billion were almost flat with 2015.

Financial Update

Everest Re Group exited the quarter with total assets of $21.32 billion, up 3.9% from $20.55 billion at the end of 2015. Everest Re Group's shareholder equity at the end of the reported quarter rose 6.6% to $8.1 billion compared with the 2015-end level of $7.6 billion.

Total cash balance at the end of the quarter jumped 69.9% to $481.9 million from $283.7 million at the end of 2015. Everest Re Group's cash flow from operations was $1.4 billion in 2016, up 27% year on year.

Book value per share increased 11% to $197.45 as of Dec 31, 2016 from $178.21 at the end 2015.

Return on equity was 12.8% in 2016.

Share Repurchase Update

During 2016, Everest Re Group bought back 2.1 million shares for $386.3 million and now has 2 million shares available for repurchase.

Dividend Update

The company declared a dividend of $1.25 per share in the quarter, up 8.7% from year-ago quarter.

Zacks Rank

Currently, Everest Re Group holds a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here .

Everest Re Group, Ltd. Price, Consensus and EPS Surprise

Everest Re Group, Ltd. Price, Consensus and EPS Surprise | Everest Re Group, Ltd. Quote

Performance of Other P&C Insurers

Among the other players from the same space that have reported their fourth-quarter earnings so far, the bottom line at Progressive Corp. PGR , The Travelers Companies Inc. TRV and RLI Corp. RLI beat the Zacks Consensus Estimate.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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