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Everest Re (RE) Q3 Loss Wider than Expected on Huge Cat Loss

Everest Re Group Ltd RE reported third-quarter 2017 operating loss of $16.43 per share, wider than the Zacks Consensus Estimate of a loss of $15.86. The bottom line compared unfavorably with $6.53 per share earned in the year-ago quarter.

Loss largely stemmed from a huge cat loss in the quarter and dragged the bottom line by $22.09 per share.

Everest Re Group, Ltd. Price, Consensus and EPS Surprise

Including net realized capital gains of 70 cents, net loss came in at $15.73 per share, which compared unfavorably with $7.06 per share earned in the year-ago quarter.

Operational Update

Everest Re Group’s total operating revenue of $1.7 million increased nearly 11.3% year over year. Revenues beat the Zacks Consensus Estimate by 6.3%.

Gross written premiums grew 15% year over year to $2 billion. The company’s worldwide reinsurance premiums increased 25%, primarily owing to new crop reinsurance program, growing premium from financial business lines and increased shares on existing business. Insurance premiums also declined 10%. However, excluding the HCI crop business divested in 2016, insurance premiums increased 30% on continued growth in new initiatives.

Net investment income came in at $137 million in the quarter, up 12% year over year.

Total claims and expenses more than doubled year over year to $2.6 million largely due to higher incurred losses and loss adjustment expenses.

The quarter suffered catastrophe losses, net of reinstatement premiums, of $1.2 billion from hurricanes Harvey, Irma, Maria and the Mexico tremors. Combined ratio deteriorated to 163.6% from 85.6% in the year-ago quarter.

Financial Update

Everest Re Group exited the quarter with total assets of $23.9 billion, up about 12.2% from $21.3 billion at the end of 2016. Shareholder equity at the end of the reported quarter declined 2.5% to $7.9 billion from the 2016-end level of $8 billion.

Total cash balance at the end of the quarter increased 21.5% to $585.4 million from $481.9 million at the end of 2016. Everest Re Group’s cash flow from operations was $409.9 million, having surged 48% year over year.

Book value per share increased 6% to $194.05 as of Sep 30, 2017, down 1.7% from the 2016-end level.

Dividend Update

The company paid out a dividend of $1.25 per share in the quarter, up 10 cents year over year.

Zacks Rank

Currently, Everest Re Group holds a Zacks Rank #4 (Sell).

You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICI... _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry that have reported third-quarter earnings so far, the bottom line at The Progressive Corp. PGR, The Travelers Companies, Inc. TRV and RLI Corp. RLI beat their respective Zacks Consensus Estimate.

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RLI Corp. (RLI): Free Stock Analysis Report
 
The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
 
Everest Re Group, Ltd. (RE): Free Stock Analysis Report
 
Progressive Corporation (The) (PGR): Free Stock Analysis Report
 
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