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Everest Group (EG) Q2 Earnings Miss on Higher Catastrophe Loss
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Everest Group, Ltd.’s (EG - Free Report) second-quarter 2024 operating income of $16.85 per share missed the Zacks Consensus Estimate by 0.7%. The bottom line jumped 10.8% year over year.
Everest Group witnessed higher premiums across its reinsurance and insurance businesses and improved net investment income. Higher catastrophe loss weighed on the upside.
Operational Update
Everest Group’s total operating revenues of $4.2 billion climbed 15.9% year over year on higher premiums earned and net investment income. The top line missed the consensus mark by 3.6%.
Everest Group, Ltd. Price, Consensus and EPS Surprise
Gross written premiums improved 12.8% year over year to $4.7 billion, driven by 16.5% growth in Reinsurance and a rise of 5.8% in Insurance. Our estimate was $5.3 billion.
Net investment income was $528 million, which surged 47.9% year over year. The upside was driven by a larger asset base as well as strong core fixed income and alternative investment returns. Our estimate was $412 million. The Zacks Consensus Estimate was pegged at $464 million.
Total claims and expenses rose 17% to $3.3 billion, primarily due to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses, corporate expenses and interest, fees and bond issue cost amortization expense. Our estimate was $3.4 billion.
Underwriting income was $358 million, which declined 10.7% year over year.
Pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums were $135 million, wider than the loss of $27 million in the year-ago quarter.
The combined ratio deteriorated 260 basis points (bps) year over year to 90.3 in the reported quarter. The Zacks Consensus Estimate was 98.4 while our estimate was 86.7.
Segment Update
The Reinsurance segment’s gross written premiums were $3.2 billion, up 16.5% year over year. Growth was broad-based across geographies and lines as the flight to quality continues to accelerate globally. Our estimate was $3.5 billion.
The combined ratio of the Reinsurance segment deteriorated 310 bps to 88.9. It matched the Zacks Consensus Estimate. Our estimate was 91.1.
The Insurance segment generated gross written premiums of $1.5 billion, up 5.8% year over year, driven by a diversified mix of property and specialty lines. International business continued to gain traction. Pricing continues to exceed the loss trend in aggregate. Our estimate was $1.9 billion.
The combined ratio deteriorated 180 bps to 94.4 for the Insurance segment. Our estimate was 76.1. The Zacks Consensus Estimate was pinned at 97.2.
Financial Update
Everest Group exited the second quarter of 2024 with total investments and cash of $39.1 billion, up 5.4% from the 2023-end level. Shareholder equity at the end of the reported quarter increased 8.6% from the figure at the end of 2023 to $15.1 billion.
Book value per share was $327.68 as of Jun 30, 2024, up 7.7% from the 2023-end level. The annualized net income return on equity was 19.7%, which contracted 210 bps from the year-ago quarter.
Everest Group’s cash flow from operations was $2.4 billion in the quarter, up 13% year over year. The company paid common share dividends of $86 million during the quarter and bought back shares worth $65 million.
The Hartford Financial Services Group, Inc. (HIG - Free Report) reported second-quarter 2024 adjusted operating earnings of $2.50 per share, which beat the Zacks Consensus Estimate by 10.6%. The bottom line climbed 33% year over year. Operating revenues of HIG amounted to $4.46 billion, which improved 9.4% year over year in the quarter under review. However, the top line missed the consensus mark of $4.49 billion.
Earned premiums of Hartford Financial rose 6.9% year over year to $5.6 billion in the second quarter but missed the Zacks Consensus Estimate by 0.9%. Pretax income of $912 million increased 35.7% year over year in the second quarter.
Radian Group Inc. (RDN - Free Report) reported second-quarter 2024 adjusted operating income of 99 cents per share, which beat the Zacks Consensus Estimate by 13.8%. Moreover, the bottom line increased 8.8% year over year. Operating revenues increased 12.3% year over year to $325.6 million due to higher net premiums earned, services revenues and net investment income.
Net premiums earned were $237.7 million, up 11.4% year over year. MI New Insurance Written decreased 18% year over year to $13.9 billion. Primary mortgage insurance in force increased 2.2% year over year to $272.8 billion.
MGIC Investment Corporation (MTG - Free Report) reported second-quarter 2024 operating net income per share of 77 cents, which beat the Zacks Consensus Estimate by 24.2%. Moreover, the bottom line increased 13.2% year over year. MGIC Investment recorded total operating revenues of $306 million, which increased 3.4% year over year. The top line beat the consensus mark by 0.6%.
Insurance in force decreased 0.3% from the prior-year quarter to $291.6 billion, which missed the Zacks Consensus Estimate of $295.26 billion. The insurer witnessed a 1.9% year-over-year decrease in primary delinquency to 23,370 loans. Net premiums written increased 0.9% year over year to $233.5 million. The figure was lower than our estimate of $238.5 million.
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Everest Group (EG) Q2 Earnings Miss on Higher Catastrophe Loss
Everest Group, Ltd.’s (EG - Free Report) second-quarter 2024 operating income of $16.85 per share missed the Zacks Consensus Estimate by 0.7%. The bottom line jumped 10.8% year over year.
Everest Group witnessed higher premiums across its reinsurance and insurance businesses and improved net investment income. Higher catastrophe loss weighed on the upside.
Operational Update
Everest Group’s total operating revenues of $4.2 billion climbed 15.9% year over year on higher premiums earned and net investment income. The top line missed the consensus mark by 3.6%.
Everest Group, Ltd. Price, Consensus and EPS Surprise
Everest Group, Ltd. price-consensus-eps-surprise-chart | Everest Group, Ltd. Quote
Gross written premiums improved 12.8% year over year to $4.7 billion, driven by 16.5% growth in Reinsurance and a rise of 5.8% in Insurance. Our estimate was $5.3 billion.
Net investment income was $528 million, which surged 47.9% year over year. The upside was driven by a larger asset base as well as strong core fixed income and alternative investment returns. Our estimate was $412 million. The Zacks Consensus Estimate was pegged at $464 million.
Total claims and expenses rose 17% to $3.3 billion, primarily due to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses, corporate expenses and interest, fees and bond issue cost amortization expense. Our estimate was $3.4 billion.
Underwriting income was $358 million, which declined 10.7% year over year.
Pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums were $135 million, wider than the loss of $27 million in the year-ago quarter.
The combined ratio deteriorated 260 basis points (bps) year over year to 90.3 in the reported quarter. The Zacks Consensus Estimate was 98.4 while our estimate was 86.7.
Segment Update
The Reinsurance segment’s gross written premiums were $3.2 billion, up 16.5% year over year. Growth was broad-based across geographies and lines as the flight to quality continues to accelerate globally. Our estimate was $3.5 billion.
The combined ratio of the Reinsurance segment deteriorated 310 bps to 88.9. It matched the Zacks Consensus Estimate. Our estimate was 91.1.
The Insurance segment generated gross written premiums of $1.5 billion, up 5.8% year over year, driven by a diversified mix of property and specialty lines. International business continued to gain traction. Pricing continues to exceed the loss trend in aggregate. Our estimate was $1.9 billion.
The combined ratio deteriorated 180 bps to 94.4 for the Insurance segment. Our estimate was 76.1. The Zacks Consensus Estimate was pinned at 97.2.
Financial Update
Everest Group exited the second quarter of 2024 with total investments and cash of $39.1 billion, up 5.4% from the 2023-end level. Shareholder equity at the end of the reported quarter increased 8.6% from the figure at the end of 2023 to $15.1 billion.
Book value per share was $327.68 as of Jun 30, 2024, up 7.7% from the 2023-end level. The annualized net income return on equity was 19.7%, which contracted 210 bps from the year-ago quarter.
Everest Group’s cash flow from operations was $2.4 billion in the quarter, up 13% year over year. The company paid common share dividends of $86 million during the quarter and bought back shares worth $65 million.
Zacks Rank
Everest Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The Hartford Financial Services Group, Inc. (HIG - Free Report) reported second-quarter 2024 adjusted operating earnings of $2.50 per share, which beat the Zacks Consensus Estimate by 10.6%. The bottom line climbed 33% year over year. Operating revenues of HIG amounted to $4.46 billion, which improved 9.4% year over year in the quarter under review. However, the top line missed the consensus mark of $4.49 billion.
Earned premiums of Hartford Financial rose 6.9% year over year to $5.6 billion in the second quarter but missed the Zacks Consensus Estimate by 0.9%. Pretax income of $912 million increased 35.7% year over year in the second quarter.
Radian Group Inc. (RDN - Free Report) reported second-quarter 2024 adjusted operating income of 99 cents per share, which beat the Zacks Consensus Estimate by 13.8%. Moreover, the bottom line increased 8.8% year over year. Operating revenues increased 12.3% year over year to $325.6 million due to higher net premiums earned, services revenues and net investment income.
Net premiums earned were $237.7 million, up 11.4% year over year. MI New Insurance Written decreased 18% year over year to $13.9 billion. Primary mortgage insurance in force increased 2.2% year over year to $272.8 billion.
MGIC Investment Corporation (MTG - Free Report) reported second-quarter 2024 operating net income per share of 77 cents, which beat the Zacks Consensus Estimate by 24.2%. Moreover, the bottom line increased 13.2% year over year. MGIC Investment recorded total operating revenues of $306 million, which increased 3.4% year over year. The top line beat the consensus mark by 0.6%.
Insurance in force decreased 0.3% from the prior-year quarter to $291.6 billion, which missed the Zacks Consensus Estimate of $295.26 billion. The insurer witnessed a 1.9% year-over-year decrease in primary delinquency to 23,370 loans. Net premiums written increased 0.9% year over year to $233.5 million. The figure was lower than our estimate of $238.5 million.