Everest Group (EG)

Global reinsurance company Everest Group (NYSE:EG) missed Wall Street’s revenue expectations in Q3 CY2025, with sales flat year on year at $4.32 billion. Its GAAP profit of $6.09 per share was 59.9% below analysts’ consensus estimates.

Company Overview

Rebranded from Everest Re in 2023 to reflect its evolution beyond just reinsurance, Everest Group (NYSE:EG) underwrites property and casualty reinsurance and insurance worldwide, serving insurance companies, corporations, and other clients across six continents.

This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. The primary headwind remains the immense and concentrated exposure to large-scale catastrophe losses, as the growing impact of climate change challenges traditional risk models and creates significant earnings volatility. Additionally, they face the risk of adverse prior-year reserve development, where claims prove more costly than anticipated, while the eventual influx of new capital from alternative sources threatens to soften the market and compress future returns.

Everest Group's main competitors include other major global reinsurers such as Munich Re, Swiss Re, and Hannover Re, as well as large insurance and reinsurance companies like Berkshire Hathaway (NYSE:BRK.A, BRK.B), Chubb Limited (NYSE:CB), and AXA (OTCQX:AXAHY).

Insurance companies earn revenue from three primary sources: 1) The core insurance business itself, often called underwriting and represented in the income statement as premiums 2) Income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities 3) Fees from various sources such as policy administration, annuities, or other value-added services. Luckily, Everest Group’s revenue grew at an exceptional 14.4% compounded annual growth rate over the last five years. Its growth beat the average insurance company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Everest Group’s annualized revenue growth of 11.7% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Everest Group’s $4.32 billion of revenue was flat year on year, falling short of Wall Street’s estimates.

Net premiums earned made up 90.6% of the company’s total revenue during the last five years, meaning Everest Group lives and dies by its underwriting activities because non-insurance operations barely move the needle.

While insurers generate revenue from multiple sources, investors view net premiums earned as the cornerstone - its direct link to core operations stands in sharp contrast to the unpredictability of investment returns and fees.

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are therefore net of what’s ceded to reinsurers as a risk mitigation and transfer strategy.

Everest Group’s net premiums earned has grown at a 13.2% annualized rate over the last five years, better than the broader insurance industry but slower than its total revenue.

When analyzing Everest Group’s net premiums earned over the last two years, we can see that growth decelerated to 10.2% annually. Since two-year net premiums earned grew slower than total revenue over this period, it’s implied that other line items such as investment income grew at a faster rate. These extra revenue streams are important to the bottom line, yet their performance can be inconsistent. Some firms have been more successful and consistent in managing their float, but sharp fluctuations in the fixed income and equity markets can dramatically affect short-term results.

Everest Group produced $3.86 billion of net premiums earned in Q3, down 1.6% year on year and short of Wall Street Consensus estimates.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at the combined ratio rather than the operating expenses and margins that define sectors such as consumer, tech, and industrials.

Combined ratio = (costs of underwriting + what an insurer pays out in claims) / net premiums earned. If a company boasts a combined ratio under 100%, it is underwriting profitably. If above 100%, it is losing money on its core operations.

Given the calculation, a lower expense ratio is better. Over the last five years, Everest Group’s combined ratio has swelled by 1.6 percentage points, going from 99.9% to 98.8%. However, the company gave back some of its expense savings as its combined ratio worsened by 8.7 percentage points on a two-year basis.

In Q3, Everest Group’s combined ratio was 103%, falling short of analysts’ expectations by 1,248.6 basis points (100 basis points = 1 percentage point). This result was 10.3 percentage points worse than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Everest Group, its EPS declined by 4.2% annually over the last five years while its revenue grew by 14.4%. However, its combined ratio didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Everest Group, its two-year annual EPS declines of 50.2% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Everest Group reported EPS of $6.09, down from $11.81 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Everest Group’s full-year EPS of $13.44 to grow 338%.

Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float–premiums collected but not yet paid out–are invested, creating an asset base supported by a liability structure. Book value per share (BVPS) captures this dynamic by measuring these assets (investment portfolio, cash, reinsurance recoverables) less liabilities (claim reserves, debt, future policy benefits). BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality because it reflects long-term capital growth and is harder to manipulate than more commonly-used metrics like EPS.

Everest Group’s BVPS declined at a 2.9% annual clip over the last five years. A turnaround doesn’t seem to be in sight as its BVPS also dropped by 10.6% annually over the last two years ($258.66 to $206.65 per share).

Over the next 12 months, Consensus estimates call for Everest Group’s BVPS to grow by 109% to $379.37, elite growth rate.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Everest Group currently has $2.35 billion of debt and $15.38 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.3×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 1.0× for an insurance business. Anything below 0.5× is a bonus.

Return on Equity, or ROE, ties everything together and is a vital metric. It tells us how much profit the insurer generates for each dollar of shareholder equity entrusted to management. Over a long period, insurers with higher ROEs tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Everest Group has averaged an ROE of 12.5%, respectable for a company operating in a sector where the average shakes out around 12.5% and those putting up 20%+ are greatly admired.

We struggled to find many positives in these results. Its net premiums earned missed and its EPS fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 3.8% to $331 immediately following the results.

Updated: December 4, 2025 at 11:38 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Everest Group.

Everest Group isn’t a terrible business, but it doesn’t pass our bar. Although its revenue growth was exceptional over the last five years, it’s expected to deteriorate over the next 12 months and its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. And while the company’s projected EPS for the next year implies the company’s fundamentals will improve, the downside is its worsening combined ratio shows the business has become less productive.

Everest Group’s P/B ratio based on the next 12 months is 0.8x. This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $368.86 on the company (compared to the current share price of $313.72).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.