Everest Re Q3 Earnings Beat Estimates, Top Line Grows

Everest Re Group Ltd. (RE) reported third-quarter 2014 operating earnings of $6.12 per share, way ahead of the Zacks Consensus Estimate of $4.97. Earnings were also up 45.7% year over year.

Operational Update

Everest Re’s third quarter total revenue of $1.54 billion came in above the Zacks Consensus Estimate of $1.44 billion. On a year-over-year basis revenues grew 9.6%. Revenue growth was brought about by higher premium earned along with higher net investment income.

Gross written premiums were $1.7 billion, reflecting an increase of 14% year over year driven by higher premiums written at the reinsurance segment.

Everest Re’s net investment income came in at $142.1 million, up 11.2% year over year.

Total claims and expenses increased 11.3% year over year to $1.2 billion. The increase was due to higher incurred losses and loss adjustment expenses and higher commission, brokerage, taxes and fees.

On the other hand, combined ratio improved 230 basis points year over year to 85.7% during the quarter.

Financial Update

Cash balance as of the end of third quarter was $401.8 million, down 34.3% year over year.

Everest Re exited the quarter with total assets of $21.5 billion, up 8.5% from the 2013-end level.

Shareholders’ equity as of the end of the reported quarter was $7.4 billion, 5.9% more than the 2013-end level.

Book value per share was $163.14 as of Sep 30, 2014, reflecting an improvement of 11.3% from $146.57 at Dec 31, 2013.

Everest Re's cash flow from operations was approximately $335.5 billion, down 13.1% from the year-ago quarter.

Share Repurchase and Dividend Update

During the quarter, Everest Re spent $75 million on share buyback.

Everest Re presently carries a Zacks Rank #3 (Buy).

Better-ranked players in the industry include Alleghany Corp. (Y), Allied World Assurance Company Holdings, AG (AWH) and AmTrust Financial Services, Inc. (AFSI). All these stocks sport a Zacks Rank # 1 (Strong Buy).