On May 18, we issued an updated research report on Everest Re Group Ltd.RE .
In the first quarter of 2016, the property and casualty insurer's operating earnings missed the Zacks Consensus Estimate due to lower income, which in turn, is attributable to a challenging interest rate environment and adverse foreign exchange movements. Although claims and expenses decreased, combined ratio increased in the first quarter owing to catastrophe losses. The company remains focused on growth through new initiatives and global expansion despite these hindrances. Going by the surprise trend, Everest Re delivered positive surprises in two of the last four quarters.
The company is highly focused on promoting growth in both Insurance and Reinsurance segments on the back of a strong balance sheet. Globally, the Insurance segment has witnessed growth despite headwinds on initiatives such as product diversification, staffing up underwriting operations, increasing geographical footprint, growth in Canadian platform and building new product distribution worldwide. The Reinsurance segment too has been pursuing credit-related opportunities, building strategic relationships and focusing on enhancing penetration internationally. New products, such as Purple Everest Colour Product and Everest Syndicate 2786, show the company's focus on broadening its reach and promoting growth in both segments.
Everest Re has been consistent in creating value for shareholders. In alignment with its share buyback program, the company repurchased shares worth $85.9 million in the first quarter. The company declared a quarterly dividend of $1.15 per share on May 18, which translates into a yield of 2.5%.
However, the company's exposure to crops and commodity prices, low investment income amid declining interest rates, a decrease in the reinsurance segment's premiums as well as adverse foreign exchange movements are headwinds. Nonetheless, the company is expecting a normal crop season in the coming quarter.
The Zacks Consensus Estimate is currently pegged at $17.88 per share for 2016 and $18.09 for 2017, translating to a year-over-year decline of 28.6% in 2016 followed by a 1.19% increase in 2017.
Currently, the insurer carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Alleghany Corporation Y , NMI Holdings Inc. NMIH , and Markel Corp. MKL . Each of these stocks sports a Zacks Rank #1 (Strong Buy).