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Analyst Blog

On May 28, the Bermuda-based property and casualty reinsurer and insurer, Everest Re Group Ltd. (RE - Analyst Report) scaled 52-week high of $162.18 per share. The momentum in the stock price was impelled by strong first-quarter earnings, which led to a positive earnings surprise of 13.8%.  

Everest Re is a niche player in the U.S. reinsurance market. The company is benefiting from flight-to-quality, rolling out new products, expanding its relationships with some larger clients and writing U.S. property exposures.

The company is also generating strong results in its insurance segment, reflecting the impact of the initiatives that were effectuated over the last couple of years. The company has been successful growing in the areas that it had targeted, including non-program workers’ comp, casualty, specialty lines, property, Excess & Surplus and DIC, non-standard auto and accident and health. Everest Re continues to see primary rate improvements in almost all insurance segments, which bode well for growth going forward.

Everest Re is also expanding its presence in the international markets which command higher margins and are accretive to the company’s return on equity.

Everest Re’s efforts to maintain its combined ratio at favorable levels over a long time is also commendable given tough operating conditions in the insurance industry.

Moreover, the company’s strong cash flow generation, stable capital position and intelligent use of capital via dividend payment and share buyback continue to attract investors.  

Everest Re carries a Zacks Rank #3 (Hold). Meanwhile, better-ranked players Allied World Assurance Company Holdings, AG (AWH - Snapshot Report), Aspen Insurance Holdings Ltd. (AHL - Snapshot Report) and AmTrust Financial Services, Inc. (AFSI - Snapshot Report) all with Zacks Rank # 1 (Strong Buy) look attractive.

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