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We are reiterating our Outperform recommendation on the shares of Everest Re Group Ltd. (RE - Analyst Report), following the solid second quarter earnings results, which included a 20% positive earnings surprise. Over the past four quarters, this company has delivered a positive surprise with an average beat of 60%. Everest Re carries a Zacks Rank #1 (Strong Buy).
 
Why Reiterate?
 
On Jul 23, Everest Re reported second-quarter operating earnings of $5.10 per share, substantially beating the Zacks Consensus Estimate of $4.26 per share. Earnings were also up 20% year over year. The earnings increase came on the back of higher premium which was up in both its business segments. 
 
Everest Re has been witnessing rising earnings estimates. Over the last 60 days, the Zacks Consensus Estimate for 2013 moved up by 7.1% to $18.2 as 8 of the 9 estimates moved north. The same for 2014 rose 4.3% to $17.30 as 7 of 9 estimates were raised over the same time frame. The expected long term earnings growth is 10.0%. 
 
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 products. 
 
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 profitability. 
 
However, exposure to cat losses and low interest rate environment are some of the headwinds.
 
Other Stocks to Consider
 
Besides Everest Re, Alleghany Corp. (Y - Snapshot Report), Global Indemnity plc (GBLI), and State Auto Financial Corp. (STFC - Snapshot Report) carrying Zacks Rank #1 (Strong Buy), look impressive. 

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