We are reiterating our Outperform recommendation on
Everest Re Group Ltd.
). The company has been performing favorably over the past many
quarters and we expect the momentum to continue given its strong
balance sheet profile along with its ability to perform favorably
amidst tough market conditions, with a seasoned management team
and huge market share in the insurance and reinsurance
Everest Re boasts of a superior risk-adjusted capital
position, long-term track record of generating favorable
earnings, experienced management team and market profile as a
leading global provider of insurance and reinsurance
Everest Re is witnessing improving rates in its reinsurance
and insurance lines of businesses.
The company has also derived top-line growth in the past few
years from its overseas business and the trend is expected to
continue in the future.
Everest Re's 10-year average combined ratio has remained below
the breakeven levels which signify its underwriting
However, exposure to cat losses and low interest rate
environment are some of the headwinds.
Everest Re has also been generating stable cash flows from
operations. Its balance sheet is supported by its conservative
investment strategy with the current investment portfolio held at
a shorter duration and equities at less than 10% of total
Everest Re has been witnessing rising earnings estimates. Over
the last 60 days, the Zacks Consensus Estimate for 2013 moved up
by 3.3% to $18.8 as 3 of the 9 estimates moved north. The
expected long term earnings growth is 14.6%.
Other Stocks to Consider
Besides Everest Re,
Global Indemnity plc
Montpelier Re Holdings Ltd.
) carrying Zacks Rank #1 (Strong Buy), look impressive.
GLOBAL INDEMNTY (GBLI): Get Free Report
MONTPELIER RE (MRH): Free Stock Analysis
EVEREST RE LTD (RE): Free Stock Analysis
ALLEGHANY CORP (Y): Free Stock Analysis
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