Everest Re (RE) To Report Q4 Earnings: What's In The Cards?
Zacks Investment Research | Feb 06, 2020 08:41PM ET
Everest Re Group, Ltd. (NYSE:RE) is set to report fourth-quarter 2019 earnings on Feb 10, after market close. In the last reported quarter, the company beat estimates by 63.77% on the back of higher contribution from both its segments – Reinsurance and Insurance.
Factors at Play
Everest Re’s fourth-quarter performance is likely to have benefited from insurance pricing gains in its different business lines, strong underwriting discipline and share buyback. The Zacks Consensus Estimate for earnings stands at $2.35, implying an increase of 139.9% from the year-ago quarter reported figure.
Overall premiums written in the quarter are likely to have gained from increase in renewal and new insurance pricing. Pricing is expected to have been driven by a combination of recent catastrophe losses, capacity shortages, trapped capital, pockets of poor loss experience and new found discipline from some of the largest players in both insurance and reinsurance.
The company is likely to have witnessed higher rates in the Property lines as well as Commercial auto business, Liability lines, Primary and Excess, Professional and Financial lines. The Zacks Consensus Estimate for premiums earned in Bermuda and Insurance businesses indicates increase of 18.2% and 22.7%, respectively.
Investment income is expected to have gained from an increase in asset base.
An increase in premium and investment income may have driven operating cash flows.
Everest Re boasts a capital position with low debt and high liquidity in its investment portfolio in addition to strong cash flow. The company’s share buyback activity is likely to have aided the bottom line.
Company’s Guidance
The company disclosed that higher-than-normal 2019 losses in the reinsurance crop book related to poor weather conditions in the United States and Canada, would negatively impact underwriting income in the amount by about $50 million. The company would witness a net favorable prior year reserve development of $19 million. Net investment income of $146 million is expected, including lower limited partnership income of $6 million.
The company provided preliminary fourth-quarter pre-tax catastrophe loss estimate of $215 million due to Typhoon and tornado losses in Dallas, Texas.
Earnings Surprise History
The company delivered positive earnings surprise in the last four quarters, the beat being 28.30%, on average.
Everest Re Group, Ltd. Price and EPS Surprise
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