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Everest Group (EG) Up 6% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Everest Group (EG - Free Report) . Shares have added about 6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Everest Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Everest Group Q2 Earnings Miss on Higher Catastrophe Loss
Everest Group, Ltd.’s 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%. 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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 5.78% due to these changes.
VGM Scores
At this time, Everest Group has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Everest Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Everest Group (EG) Up 6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Everest Group (EG - Free Report) . Shares have added about 6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Everest Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Everest Group Q2 Earnings Miss on Higher Catastrophe Loss
Everest Group, Ltd.’s 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%. 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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 5.78% due to these changes.
VGM Scores
At this time, Everest Group has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Everest Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.