Everest Re Q2 Earnings Miss Estimates, Top Line Strengthens

Everest Re Group Ltd. RE reported second-quarter 2014 operating earnings of $5.41 per share, missing the Zacks Consensus Estimate of $5.75. Earnings were, however, up 6.1% year over year.

Operational Update

Everest Re's total revenue of $1.45 billion came in above the Zacks Consensus Estimate of $1.42 billion. On a year-over-year basis revenues grew 7.2%. Revenue growth was brought about by higher premium earned and higher net realized capital gains, partly offset by lower net investment income.  

Gross written premiums were $1.4 billion, reflecting an increase of 12% 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 $131.2 million in the quarter, down 11.8% year over year.

Total claims and expenses increased 5.7% year over year to $1.1 billion. The increase was owing to higher incurred losses and loss adjustment expenses and higher commission, brokerage, taxes and fees.

On the other hand, combined ratio improved 290 basis points year over year to 84.7% during the quarter.

Financial Update

Cash balance as of the end of second quarter was $341.5 million, down 22% year over year.

Everest Re exited the quarter with total assets of $21.2 billion, up 6.9% from the 2013-end level.

Everest Re's shareholders' equity as of the end of the reported quarter was $7.3 billion, 5.1% more than the 2013-end level.

Book value per share was $160.27 as of Jun 30, 2014, improving 9.3% from $146.57 at Dec 31, 2013.

Everest Re's cash flow from operations was approximately $223.3 billion, up 24% from the year-ago quarter.

Share Repurchase and Dividend Update
 
During the second quarter, Everest Re spent $75 million on share buyback.

The company also paid approximately $34 million in dividend in the quarter.

Zacks Rank

Everest Re presently carries a Zacks Rank #2 (Buy).

Peer Performance

Other insurers like Assurant Inc. AIZ and ACE Limited ACE reported second-quarter earnings ahead of the respective Zacks Consensus Estimate. Another player, RLI Corp.'s RLI second-quarter earnings were in line with the Zacks Consensus Estimate.