Buyback, Dividend Hike Helps Everest Re Hit 52-Week High

On Nov 21, Everest Re Group Ltd. (RE), touched a 52-week high of $175.35. The rise in the stock was propelled by the recent dividend increase, share buyback expansion. Investors were also buoyed by the strong third-quarter earnings which outpaced the Zacks Consensus Estimate by 23.1%. About 0.2 million shares exchanged hand in the last session.

Year to date the stock has surged 16.5% compared with 12.6% increase in S&P 500.

Growth Drivers

Investors are impressed by recent dividend hike of 27% in its regular quarterly dividend to 95 cents per share from 75 cents.

The company also announced an expansion to its share buyback plans in that it would repurchase an additional 5 million shares.

With its intelligent capital management the company’s shareholder’s value creation has averaged 14% annually over the last 5 years.

During the most recent concluded quarter Everest Re showed an exemplary performance. Everest Re’s operating income of $6.12 per share easily surpassed the Zacks Consensus Estimate of $4.97 and improved 45.7% year over year. The company’s strong third-quarter financial performance was a continuation of superior results and attractive revenue and earnings growth.

Everest Re's gross written premiums were $1.7 billion, reflecting an increase of 14% year over year driven by higher premiums written at the reinsurance segment.

The insurers’ combined ratio (which measures underwriting profitability) improved 230 basis points year over year to 85.7% during the quarter.

Book value per share, which is a measure of company’s net worth, also grew 11.3% from Dec 2013 level to $163.14 as of Sep 30, 2014.

Estimate Revision Shows Strength

Driven by optimism surrounding the stock, over the last 30 days, the Zacks Consensus Estimate for 2014 earnings per share climbed 5.5% to $22.40.

Everest Re carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Other players worth considering are industry include AmTrust Financial Services, Inc. (AFSI), Arch Capital Group Ltd. (ACGL), Atlas Financial Holdings Ltd. (AFH). All these stocks carry a Zacks Rank #1 (Strong Buy).