What Awaits Everest Re Group (RE) This Earnings Season?

Everest Re Group RE is slated to report second-quarter 2020 results on Aug 5, after market close. The company delivered an earnings surprise of 6.90% in the last-reported quarter.

Factors to Consider

Premiums are likely to have benefited from its global presence, product diversification, strong renewal retention and better pricing. Everest Re projects gross written premium to grow year over year in the soon-to-be-reported quarter.

The Insurance segment is likely to have benefited from product diversification, staffing up of underwriting operations, international insurance growth and ramp up of Canadian and European platforms. The Lloyds platform should also add to the upside. The Zacks Consensus Estimate for premiums earned is pegged at $570 million, up 23.4% from the year-ago reported quarter.

The Reinsurance segment is likely to have been aided by growth initiatives including deployment of increased capacity to pro-rata deal, which has attractive original pricing terms and conditions.

Repositioning of its portfolio by moving up fixed-income credit quality and reducing equity exposure may have aided net investment income. Everest Re estimates net investment income of $38 million, pre-tax, for the second quarter of 2020. The Zacks Consensus Estimate for net investment income is pegged at $4 million.

The company expects pre-tax net catastrophe losses of $15 million from claims related to civil unrest in the United States in its Insurance segment. The company also estimates pre-tax net pandemic losses of $160 million, divided between its Reinsurance segment ($130 million) and Insurance segment ($30 million).  The consensus estimate for Insurance segment’s combined ratio is pegged at 103, indicating a deterioration of 700 basis points from the year-ago reported figure.

Despite cat losses, Everest Re expects to report underwriting profit in the second quarter of 2020.  Nonetheless, The Zacks Consensus Estimate for combined ratio is pegged at 99, implying a deterioration of 100 basis points from the year-ago period reported figure.

The Zacks Consensus Estimate is pegged at $1.88 per share, suggesting 76.1% year-over-year decrease.

Everest Re Group, Ltd. Price and EPS Surprise

Everest Re Group, Ltd. Price and EPS Surprise

Everest Re Group, Ltd. price-eps-surprise | Everest Re Group, Ltd. Quote

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Everest Re this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case as you can see below.

Earnings ESP: Everest Re has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.88. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Everest Re currently carries a Zacks Rank of 3.

Stocks to Consider

Some other insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

American Financial Group AFG has an Earnings ESP of +21.45% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conifer Holdings CNFR has an Earnings ESP of +68.42% and a Zacks Rank #3.

Allstate Corporation ALL has an Earnings ESP of +11.10% and a Zacks Rank of 3.

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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.

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