Everest Re Group Ltd. RE reported first-quarter 2014 operating earnings of $5.93 per share, surpassing the Zacks Consensus Estimate by nearly 14% and the year-ago earnings by 0.9%. This mark two successive quarters of positive surprises by the Bermuda-based property and casualty insurer.
Including net realized capital gains of 27 cents per share, the company reported net income of $6.21 per share, declining 17.2%.
Operational Update
Everest Re's total revenue of $1.28 billion missed the Zacks Consensus Estimate by 8%. The top line was also short of the year-ago number by 6%. The decline was primary attributable to lower net investment income, a significant drop in net realized capital gains and derivatives losses compared to gains in the year-ago quarter.
Gross written premiums were $1.3 billion, an increase of 7% year over year driven by higher premiums written at the reinsurance segment.
Everest Re's net investment income including limited partnership income came in at $123.2 million in the quarter, down 15.5% year over year.
Total claims and expenses increased 3.4% year over year to $928.6 million. The increase was owing to higher incurred losses and loss adjustment expenses and an increase in commission, brokerage, taxes and fees.
A decline in top-line compounded with a hike in expenses led to a lower net income in the quarter.
On the other hand, combined ratio improved 70 bps year over year to 80.0% during the quarter.
Financial Update
Cash balance as of the end of first quarter was $385 million, decreasing 37% from the 2013-end level.
Everest Re exited the quarter with total assets of $20.1 billion, up 1.5% from the 2013-end level.
Everest Re's shareholders' equity as of the end of the reported quarter was $7.04 billion, 1% more than the 2013-end level.
Return on equity was 16.6% in the reported quarter.
Book value per share was $152.80 as on Mar 31, 2014, improving 4% from $146.57 at Dec 31, 2013.
Everest Re's cash flow from operations was approximately $367.1 billion, up 42% from the year-ago quarter.
Share Repurchase and Dividend Update
During the first quarter, Everest Re spent $250 million to buy back 1.7 million shares. The company is now left with 2.9 million shares available for repurchase.
The company also paid $35 million in dividend in the quarter.
A total of $285 million returned to shareholders in the quarter marked the largest spending in a quarter in the history of the company.
Performances by other Property and Casualty Insurers
RLI Corporation RLI posted first-quarter 2014 operating earnings of 57 cents per share, exceeding the Zacks Consensus Estimate by 5.6% and the year-ago quarter's earnings by 9.6%.
The Travelers Companies Inc.'s TRV first-quarter net income of $2.95 per share outperformed the Zacks Consensus Estimate by 38% and improved 28% year over year.
W.R. Berkley Corp. WRB reported first-quarter 2014 core operating earnings of $1.00, handily beating the Zacks Consensus Estimate of 79 cents per share. Earnings also surged 35.1% year over year.
Zacks Rank
Everest Re presently carries a Zacks Rank #2 (Buy).
EVEREST RE LTD RE: Free Stock Analysis Report
RLI CORP RLI: Free Stock Analysis Report
TRAVELERS COS TRV: Free Stock Analysis Report
BERKLEY WR CP WRB: Free Stock Analysis Report
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