Will Catastrophe Loss Weigh on Everest Group's Q1 Earnings?

Everest Group, Ltd. EG is expected to register an improvement in its top line but a decline in its bottom line when it reports first-quarter 2025 results on April 30, after the closing bell.

The Zacks Consensus Estimate for EG’s first-quarter revenues is pegged at $4.47 billion, indicating 8.1% growth from the year-ago reported figure.

The consensus estimate for earnings is pegged at $7.22 per share. The Zacks Consensus Estimate for EG’s first-quarter earnings has moved down 1.7% in the past 30 days. The estimate suggests a year-over-year decline of 55.7%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

What the Zacks Model Unveils for EG

Our proven model does not predict an earnings beat for Everest Group this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) that increases the odds of an earnings beat. This is not the case here, as you can see below.

Earnings ESP: Everest Group has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at $7.22. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Everest Group, Ltd. Price and EPS Surprise

Everest Group, Ltd. price-eps-surprise | Everest Group, Ltd. Quote

Zacks Rank: EG carries a Zacks Rank #3 at present.

Factors Likely to Shape Q1 Results of EG

Premium growth is likely to have been driven by the solid performance of EG’s Reinsurance and Insurance segments. We expect the net written premium to increase 7.1% to $4.2 billion in the first quarter.

The Insurance segment is likely to have benefited from an increase in property, short-tail business, specialty casualty business and other specialty lines of business, as well as new business. We estimate premiums earned to increase 0.6% to $875.9 million in the to-be-reported quarter.

The Reinsurance segment is expected to have benefited from solid international growth, improved property pro rata and property catastrophe excess of loss lines of business. We expect premiums earned to improve 13.2% to $3.1 billion in the fourth quarter.

Net investment income is likely to have gained from a larger asset base as well as strong core fixed income investment returns. We expect net investment income to be $473.5 million, up 3.6% from the year-ago reported quarter. The Zacks Consensus Estimate is pegged at $493 million, indicating an increase of 7.8% from the year-ago reported figure.

The top line in the to-be-reported quarter is expected to have gained from higher net written premiums and net investment income. 

Rate increases, exposure growth and traditional risk management capabilities are expected to have improved underwriting profitability, leading to an improvement in the combined ratio. However, catastrophe losses relating to the recent California wildfires are likely to have weighed on the improvement. We expect the combined ratio to be 90.3 in the to-be-reported quarter. The Zacks Consensus Estimate for the metric is pegged at 99. 

We estimate underwriting income from the Insurance segment to be $80.6 million. The same from the Reinsurance segment is expected to be $195.1 million in the to-be-reported quarter.

Total claims & expenses are likely to have increased largely owing to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses, corporate expenses, interest, fees and bond issue cost amortization expense. We expect the metric to increase 13.7% to $3.7 billion. 

Share buybacks in the to-be-reported quarter are anticipated to have provided a boost to the bottom line.

Stocks to Consider

Here are some insurance stocks you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat:

Enact Holdings, Inc. ACT has an Earnings ESP of +2.68% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at $1.12, indicating an increase of 7.6% from the year-ago reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.

ACT’s earnings beat estimates in three of the last four reported quarters and missed in one.

Assurant, Inc. AIZ has an Earnings ESP of +1.53% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at $3, indicating a decrease of 37.2% from the year-ago reported figure. 

AIZ’s earnings beat estimates in each of the last four quarters.

Lemonade, Inc. LMND has an Earnings ESP of +3.40% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at a loss of 94 cents, indicating a decline of 40.3% from the year-ago reported figure. 

LMND’s earnings beat estimates in each of the last four quarters.

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This article originally published on Zacks Investment Research (zacks.com).

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