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Everest Re Gains From Wide Product Portfolio, Cat Loss a Woe


Everest Re Group, Ltd. RE has been witnessing favorable performance at its Insurance segment driven by diversified product portfolio, international insurance expansion, broadening the property insurance footprint, and widening the relationship between property and casualty. We expect this momentum to continue in the near term on the back of the aforementioned positives.

Further, the Reinsurance business has been generating better-than-expected results for a considerable period of time backed by broad distribution abilities, industry-leading expense advantage and advanced capital and hedging capabilities. Moreover, strategic partnerships are likely to add value to the already strong and thriving reinsurance segment.

With gradual rise in interest rates, the insurer has been witnessing higher investment income . Apart from a better interest rate environment, investment grade fixed income portfolio and higher limited partnership income are likely to aid investment results in the near term.

The company dealing in property and casualty (P&C) and reinsurance services and products has been exhibiting top-line growth over the past few years. In fact, the momentum is likely to sustain backed by higher premiums and better investment results.

A strong capital position aids Everest Re Group to return value to its shareholders via dividend hikes and share buybacks, raising investors’ optimism on the stock. Its dividend yield of 2.2% betters the sector average of 1.9%, making the stock an attractive pick for yield-seeking investors.

Shares of this Zacks Rank #3 (Hold) P&C insurer have gained 3.7% year to date, underperforming the industry's growth of 10.3%. However, we expect the aforementioned positives to turn the stock around in the near term.

On the flip side, being a P&C insurer, the company is exposed to catastrophe losses, which induced volatility in earnings.

Nonetheless, the Zacks Consensus Estimate for current-year earnings per share is pegged at $17.23, representing year-over-year growth of 89.3%.

Moreover, Everest Re’s surprise history reflects its sustained operational performance with the company having delivered positive surprises in two of the trailing four quarters, the average beat being 37.91%.

Stocks to Consider

Some better-ranked stocks from the insurance industry are Markel Corporation MKL, RenaissanceRe Holdings Ltd. RNR and Athene Holding Ltd. ATH, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Markel markets and underwrites specialty insurance products in the United States, the U.K., Canada and internationally. The company delivered positive surprises in two of the trailing four quarters with an average beat of 34.72%.

RenaissanceRe Holdings provides reinsurance and insurance coverages in the United States and internationally. The company pulled off positive surprises in three of the previous four quarters with an average positive surprise of 31.16%.

Athene Holding issues, reinsures, and acquires retirement savings products in the United States, the District of Columbia, and Germany. The company came up with positive surprises in the preceding four quarters with an average earnings surprise of 15.03%.

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