On Dec 30, 2015 we issued an updated research report on Everest Re Group, Ltd. RE.
Everest Re boasts a strong presence in both insurance and reinsurance markets. This, coupled with the introduction of new reinsurance products and undertaking of additional initiatives in the insurance segment, well positions the company for long-term growth. The expected long-term earnings growth is currently pegged at 10%.
An excellent operating track record has enabled Everest Re to generate stable cash flows. The property and casualty (P&C) insurer thus remains well poised to benefit from capital adequacy, financial flexibility and risk management capabilities.
A solid operational performance is further helping the insurer to pursue effective capital deployment, which in turn is enhancing shareholders’ value. Last month, the insurer’s Board of Directors approved a 21% hike in its quarterly dividend. The company has 4.5 million shares remaining to be repurchased under the current authorization.
Exposure to a low interest rate environment, however, has resulted in the persistent decline in investment returns, thereby negatively impacting profitability. Moreover, a competitive reinsurance market and exposure to catastrophe losses will adversely affect the reinsurance rates and earnings, respectively.
Everest Re’s third-quarter 2015 earnings beat the Zacks Consensus Estimate owing to top-line growth and higher premiums. In terms of surprise trend, this Zacks Rank #3 (Hold) P&C insurer delivered positive surprises in three of the last four quarters with an average beat of 13.69%.
Stocks to Consider
Some better-ranked P&C insurers are Hallmark Financial HALL, Aspen Insurance Holdings AHL, and Heritage Insurance Holdings, Inc. HRTG. Each of these sports a Zacks Rank #1 (Strong Buy).
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