On May 30, 2014, we issued an updated research report on the
Everest Re Group Ltd.
). The company reported first-quarter 2014 operating earnings of
$5.93 per share, handily beating the Zacks Consensus Estimate by
nearly 14%. This marked two successive quarters of positive
surprise by the Bermuda-based property and casualty insurer.
Though Everest Re is a niche player in the reinsurance space, it is
building up its insurance market to achieve meaningful and
sustainable long-term growth. The company is diversifying its
products and forming new lines of businesses in the insurance
business. We believe that recent insurance initiatives, including
the company's primary Accident and Health, Canadian insurance, and
contingency business are poised for profitable growth in 2014 and
Everest Re is also making inroads in the international market, a
business which commands high margin returns and is expected to fuel
The company's due diligence to maintain combined ratio historically
at low levels compared to the industry also remains commendable. A
combined ratio below 100 signifies underwriting profitability and
we expect the company to continue with the trend given its
disciplined underwriting principles.
Turning to Everest Re's capital position, the company remains
firmly poised with superior risk-adjusted capital and moderate
Nevertheless, Everest Re's results are exposed to volatility from
cat losses. Historically, cat losses have drained the bottom line
and despite cat modeling deployed by the company, weather-related
losses will continue to dampen results.
Also the company is subjected to soft reinsurance pricing given
benign cat loss suffered by the industry in 2013. A low pricing
environment is consequently expected to restrict top-line growth in
2014 in the reinsurance segment
While Everest Re carries a Zacks Rank #3 (Hold), better-ranked
stocks in the industry include
Allied World Assurance Company Holdings, AG
Aspen Insurance Holdings Ltd.
AmTrust Financial Services, Inc.
). All these carry a Zacks Rank # 1(Strong Buy).
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EVEREST RE LTD (RE): Free Stock Analysis Report
AMTRUST FIN SVC (AFSI): Free Stock Analysis
ALLIED WORLD AS (AWH): Free Stock Analysis
ASPEN INS HLDGS (AHL): Free Stock Analysis
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