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Here’s Why Everest Re is an Attractive Investment Option


Everest Re Group Ltd RE remains well-poised for growth, given traditional risk management capabilities, capital adequacy and financial flexibility. The Zacks Rank #1 (Strong Buy) property and casualty insurer bears immense potential owing to a few good growth drivers.

Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $21.72 and at $23.40 for 2019, marking a year-over-year rise of 138.7% and 7.7%, respectively.

The top line marks a 9.6% and 7.1% year-over-year increase for 2018 and 2019, respectively.

The expected long-term earnings growth rate is pegged at 10%.

Northbound Estimates: Recent positive revisions have raised the 2018 Zacks Consensus Estimate for Everest Re to $21.72, up 7.4% over the last 30 days. The consensus mark of $23.40 for 2019 inched up 0.7% over the same time frame.

Positive Earnings Surprise History: Everest Re’s earnings have surpassed the Zacks Consensus Estimate in three of the last four quarters with an average beat of 43.74%.

Price Performance: Shares of Everest Re have rallied 18.7% year to date, outperforming the industry’s 6.5% gain.

Underpriced: Shares are currently undervalued. Price to book ratio stands at 1.29, lower than the industry average of 1.70.

Growth Drivers in Place

Strategic initiatives like formation of Everest Syndicate 2786, building new product distribution as well as strategic relationships within its specialty insurance operations both in the United States and internationally have been helping the company improve gross written premiums at its Insurance segment. Also, product diversification and more staff addition to underwriting operations contribute to this upside.

Growth initiatives such as deployment of increased capacity to pro-rata deal pursued credit-related opportunities across various territories, developed new strategic world-wide relationships with several key reinsurance clients, rise in penetration and breath of the international faculty of book are some of the company’s actions taken to ramp up its performance at the Reinsurance segment. Mt. Logan Re and Kilimanjaro Re Ltd. are key growth drivers for the company and remain the fastest growing capital market vehicles.

Net investment income has been improving on the back of rising limited partnership investments, reduced exposure to high-yield debt and public equity plus a well-balanced portfolio. Given the gradually improving interest rate environment, we expect this momentum to continue in the near term.

The company’s strong capital position aids it to boost shareholder value through dividend hikes and share buybacks. With a 4% dividend raise in November 2017, the company doubled its payout since the third quarter of 2013. Everest Re also has 1.8 million shares left under its repurchase authorization.

Other Stocks to Consider

Some other top-ranked stocks from the insurance industry are American Financial Group, Inc., AFG, Alleghany Corporation Y and Heritage Insurance Holdings, Inc. HRTG, each sporting the same bullish Zacks Rank of 1 as Everest Re. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial Group provides property and casualty insurance products in the United States. The company pulled off an average four-quarter positive surprise of 26.31%.

Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. The company delivered an average beat of 5.16% in the last four quarters.

Heritage Insurance provides personal and commercial residential insurance products. The company came up with an average positive earnings surprise of 14.66% in the trailing four quarters.

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