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Shares of Everest Re Group Ltd. (RE - Analyst Report) have been surging in price, hitting its 52-week high of $105.84 on June 20, 2012 driven by a solid first-quarter performance. With a steady uptrend in share price and a 15% boost in the Zacks Consensus Estimate for 2012, this Zacks #1 Rank (Strong Buy) property & casualty insurer looks attractive.
Upbeat Earnings and Positive Estimate Revisions
On April 25, Everest Re reported first quarter 2012 operating earnings per share of $4.48, topping the Zacks Consensus Estimate of $3.51 by 28% and rebounding from the year-ago loss of $5.95. A modest improvement in revenue coupled with lower claims expenses benefited the earnings.
Revenues of $1.25 billion improved 3% year over year, largely on the back of higher net realized capital gains, partly offset by lower premiums earned and lower investment income.
Total claims and expenses were down 42% from the year-ago quarter to $906.3 million, which was primarily due to lower losses. The loss ratio in the quarter narrowed to 60.4% from 123.6% in the prior-year quarter.
Everest Re spent $125 million to buyback shares and made $26 million in dividend payments, and still managed to increase surplus by $260 million.
Over the last 60 days, the Zacks Consensus Estimate for 2012 advanced 15% to $14.00, while estimates for 2013 moved up 7% to $13.38.
Valuation Looks Attractive
Shares of Everest Re currently trade at a forward P/E of 7.5x, a 58% discount to the peer group average of 17.8x. On a price-to-book basis, shares currently trade at 0.9x, a 50% discount to the peer group average of 1.8x. Also, the ROE looks attractive compared with the peer group. The trailing 12-month ROE is 7.6% versus 6.6% for the peer group average.
Market Performance & Technicals
The stock has been steadily trading above its 50 and 200-day moving averages since the first quarter earnings release.
Volume is fairly strong, averaging roughly 441,275 daily. The year-to-date return for the stock is 24.25%, much above the S&P 500s return of 7.8%.
Incorporated in 1999 and headquartered in Hamilton, Bermuda, Everest Re writes property and casualty insurance and reinsurance. With about 1,000 employees worldwide, Everest Re has branches in Canada, the United States, Singapore, the United Kingdom and Ireland.
With a market capitalization of $5.51 billion, Everest Re competes with White Mountains Insurance Group Ltd. (WTM).
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