Everest RE Group Ltd. (RE) reported record fourth-quarter 2013 operating earnings of $6.28 per share, significantly surpassing the Zacks Consensus Estimate of $5.00 per share by 25.6%. Earnings also reflected a phenomenal rise from the prior-year quarter number of 80 cents per share.
Including net realized capital gains of $1.27 per share, the company reported net income of $7.54 per share, surging from $1.13 reported in the year-ago quarter.
The bottom-line upside was fueled by the company’s successful strategies to capture the market with its enriched product portfolio that is witnessing growing demand.
Operational Update
Everest RE’s total revenue of $1.52 billion during the quarter exceeded the Zacks Consensus Estimate by 8.8%. It also surpassed the year-ago quarter results by 19.2%. Top-line growth was driven by higher earned premiums as well as significantly higher other net realized capital gains, partially offset by lower net investment income.
Gross written premiums were $1.3 billion, an increase of 14% year over year driven by higher premiums written at reinsurance as well as insurance segment.
Everest RE’s net investment income including limited partnership income came in at $126.1 million in the quarter, down 13.8% year over year.
Total claims and expenses slid 13.7% year over year to $1.06 billion. The decline was attributable to lower incurred losses and loss adjustment expenses and lower interest, fees and bond-issue cost amortization expense.
Top-line growth coupled with expense reduction led to a substantial margin expansion for Everest Re. Operating margin during the fourth quarter was 20%, increasing 1670 basis points (bps) from the year-ago quarter figure.
The combined ratio improved 2690 bps year over year to 81.5% during the quarter.
Full-year 2013 Highlights
Everest Re posted record full-year 2013 net operating income of $21.47 per share which surged 57.6% from the 2012 number.
Including net realized capital gains of $3.98 per share, Everest Re reported net income of $25.44 per share for 2013, which soared 61.1% year over year.
Total revenues of Everest Re amounted to $5.064 billion for the full year, up 14.6% from the 2012 number.
Financial Update
Everest Re exited the quarter with total assets of $19.8 billion, up 0.2% from 2012-end.
Total cash balance as of the end of 2013 was $611.4 million, increasing 13.8% from the Dec 31, 2012-level.
Everest Re's cash flow from operations was approximately $1.10 billion during 2013, up 58.1% from the year-ago quarter results.
Everest Re’s Shareholders’ equity as of the end of the reported quarter was $6.97 billion, 3.5% more than the 2012-end level.
Return on Equity was 20% during 2013.
Share Repurchase Update
During the fourth quarter, the company bought back 0.47 million shares for $72 million taking full year tally to 4.7 million shares bought back for $621.9 million. Additionally, in Jan 2014, the company repurchased $28 million worth of its shares. The company is left with 4.4 million shares available for repurchase.
Performances by other Property and Casualty Insurers
Among the others, ACE Limited (ACE) reported operating net earnings of $2.39 per share in the fourth quarter of 2013, surpassing the Zacks Consensus Estimate by 19.5%. Moreover, earnings surged nearly 67% on a year-over-year basis.
American Financial Group Inc. (AFG) reported fourth-quarter operating earnings per share of $1.28, which comfortably beat the Zacks Consensus Estimate of $1.23. On a year-over-year basis, earnings surged 91%.
The Travelers Companies Inc. (TRV) reported operating net earnings of $2.68 per share in the fourth quarter of 2013, surpassing the Zacks Consensus Estimate by 23.5%. Moreover, earnings improved nearly fourfold on a year-over-year basis.
Zacks Rank
Everest Re presently carries a Zacks Rank #4 (Sell).
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