Everest Re Group EG is slated to report first-quarter 2024 earnings on Apr 29, after market close. The Zacks Consensus Estimate for first-quarter earnings per share is pegged at $16.03 on revenues of $4.2 billion. The top and bottom-line estimates imply year-over-year improvements of 1.7% and 28%, respectively.
Per our proven model, stocks with a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) are likely to beat on earnings.
At present, Everest Re has an Earnings ESP of -1.61% and a Zacks Rank of 3. Hence, it is presumed that Everest Re is unlikely to beat estimates this earnings season.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Price Performance
Year to date, shares of Everest Re have gained 3.4% compared with the industry’s 5.3% increase, the Finance sector’s 1.4% rise and the Zacks S&P 500 composite’s increase of 6.1%.
Everest Group, Ltd. Price and EPS Surprise 
Everest Group, Ltd. price-eps-surprise | Everest Group, Ltd. Quote
Factors Acting in Favor
Premium growth is likely to have been driven by the solid performance of its Reinsurance segment, rate increases, exposure growth and strong underwriting. We expect net written premiums to increase 21.5% to $4.4 billion in the first quarter.
The Insurance segment is likely to have benefited from balanced and diversified growth across most lines of business and geographies, property and specialty lines, in particular as well as new business and strong renewal retention. We estimate premiums earned to increase 18.3% to $1 billion in the to-be-reported quarter.
Solid performance in property and specialty lines, including marine, aviation, trade credit and political risk, is likely to have driven the segment’s performance. The shift to shorter-tail lines with favorable pricing and a strong profit trajectory are likely to have aided the company.
The Reinsurance segment is likely to have benefited from growth in Casualty and Financial Lines, driven by an increase in core casualty clients. EG estimates improvements in ceding commissions to benefit premiums earned. We expect the metric to improve by 22.8% to $2.7 billion in the to-be-reported quarter.
The insurer already has a dominant holding in property catastrophes. Therefore, intensifying focus to build on proportional property deals, aviation, marine and facultative bodes well.
Net investment income is likely to have benefited from an improved interest rate environment. We expect net investment income to be $410.3 million, up 57.8% from the year-ago reported quarter.
Also, its strategy to sell lower-yielding bonds while investing in higher coupon bonds with higher credit quality adds to book yield increase and improves interest income.
Headwinds
The reinsurance market remains challenged by average market rates, depending on the line of business, product type and territory. Competitive conditions in the reinsurance segment continue to push rates lower and commissions higher.
EG is exposed to catastrophe losses, which weigh on underwriting profitability. Gallagher Re’s National Catastrophe and Climate Report estimates global insured losses from natural catastrophes at $20 billion for the first quarter of 2024.
Nonetheless, rate increase, exposure growth, prudent underwriting and traditional risk management capabilities are likely to favor underwriting results and combined ratio in the to-be-reported quarter. We expect the combined ratio to be 85.5 in the to-be-reported quarter, improving 570 basis points from the year-ago reported quarter.
We estimate underwriting income in the Insurance segment to increase 97.6% to $132.4 million and 101.1% to $412.3 million in the Reinsurance segment in the to-be-reported quarter.
Stocks to Consider
Arch Capital Group ACGL has an Earnings ESP of +0.16% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for first-quarter 2024 earnings is pegged at $2.06, indicating a year-over-year increase of 19.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
ACGL earnings beat estimates in each of the last four reported quarters.
Axis Capital Holdings AXS has an Earnings ESP of +1.56% and a Zacks Rank of 3. The Zacks Consensus Estimate for first-quarter 2024 earnings is pegged at $2.68, indicating an increase of 15% from the year-ago reported figure.
AXS earnings beat estimates in each of the last four reported quarters.
Skyward Specialty SKWD has an Earnings ESP of +7.99% and a Zacks Rank of 2. The Zacks Consensus Estimate for first-quarter 2024 earnings stands at 66 cents, indicating an increase of 57.1% from the year-ago reported figure.
SKWD earnings beat estimates in each of the last four reported quarters.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
