Everest Re (RE) to Report Q3 Earnings: What's in Store?
Everest Re's (RE) Q3 results are likely to benefit from rate increases, strong renewal retention, new business, and higher net investment income, offset by higher cat loss.
Everest Re Group RE is slated to report third-quarter 2021 results on Oct 27, after market close. The company delivered an earnings surprise of 62.56% in the last reported quarter.
Factors to Consider
The Insurance segment is likely to have benefited from disciplined cycle management, new business opportunities, continued double-digit rate increases and strong renewal retention on existing business, and increases in specialty casualty business, property business and professional liability business. The Zacks Consensus Estimate for premiums earned is pegged at $659 million, indicating an increase of 22.7% from the year-ago reported figure.
The Reinsurance segment is likely to have benefited from increases in most lines of business, property pro-rata business, casualty pro-rata business, casualty excess of loss, and positive impact from the movement of foreign exchange rates. The Zacks Consensus Estimate for premiums earned is pegged at $1.9 billion, indicating an increase of 19.7% from the year-ago reported figure.
Net investment income is likely to have benefited from higher income from the fixed income portfolio, increase in limited partnership income and reported net asset values.
Everest Re estimates a preliminary pre-tax catastrophe loss of $635 million, primarily due to Hurricane Ida and floods in Europe. The estimated losses are net of reinsurance recoveries and reinstatement premiums. Exposure to catastrophe events stemming from Hurricane Ida is likely to have weighed on underwriting profitability.
The Reinsurance segment is estimated to suffer $335 million cat loss from Hurricane Ida and $220 million from European floods. The Insurance segment is estimated to incur $80 million cat loss due to Hurricane Ida.
However, rate increase, exposure growth, prudent underwriting and traditional risk management capabilities are likely to have favoured combined ratio in the to-be-reported quarter. The consensus estimate for the combined ratio is pegged at 100, indicating an improvement of 500 basis points from the year-ago reported number. The consensus estimate for Reinsurance segment combined ratio is also pegged at 100, indicating an improvement of 500 basis points. The consensus estimate for Insurance segment combined ratio is pegged at 99, implying an improvement of 600 basis points.
The Zacks Consensus Estimate for Everest Re’s third quarter is currently pegged at a loss of $1.29 per share against the year-ago quarter reported earnings of $2.42 per share.
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. But that’s not the case here.
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 a loss of $1.29. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Everest Re Group, Ltd. Price and EPS Surprise
Zacks Rank: Everest Re carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Some stocks from the finance sector with the apt combination of elements to surpass estimates this reporting cycle are as follows:
Cigna Corporation CI has an Earnings ESP of +2.19% and a Zacks Rank #3.
The Hartford Financial Services Group, Inc. HIG has an Earnings ESP of +5.61% and is a Zacks #3 Ranked stock.
MetLife, Inc. MET has an Earnings ESP of +1.20% and a Zacks Rank #3.
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