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Everest Re Group Ltd.’s wholly-owned unit, Everest Reinsurance Holdings, Inc. announced the pricing of $1 billion aggregate principal amount of senior notes. The notes carry an interest rate of 3.125% and are scheduled to mature in 2052.
The company aims to deploy the net proceeds from the senior notes for general corporate purposes and to meet its long-term strategic objectives.
The company issued senior notes amid a low interest rate environment to get more funds and enhance financial flexibility without affecting its liquidity. In the first half of 2021, Everest generated record operating cash flow that increased 45.5% year over year, reflecting the strength of premium growth. It exited the quarter with total investments and cash of $27.1 billion, which increased 6.3% from the 2020 level.
By capitalizing on the low interest rate environment, the company is also attempting to reduce its interest burden, thus facilitating margin expansion. Also, the company’s operational strength should enable it to service debt uninterruptedly, thereby maintaining the stock’s creditworthiness.
Its debt has been decreasing since 2017 with an improvement in debt to capital. However, as of Jun 30, 2021, the total debt of the company was about $1.9 billion, which increased 0.05% from 2020-end level. Nevertheless, the debt-to-capital ratio on Jun 30, 2021 was 15.5, which improved 90 basis points from 2020 end and compared favorably with the industry average of 19.5. However, the latest offering will increase the debt-to-capital ratio by 630 basis points.
Times interest earned of 29.9 at second-quarter end was good when compared with the fourth-quarter end figure of 17.1. The improvement in this ratio indicates that the firm will be able to meet current obligations in the near future without any difficulties.
The company’s capital position remains strong, with high-quality invested assets, significant liquidity, and low financial leverage. Its liquidity requirements are generally met from cash flow from operations. It generally expects annual positive cash flow from operations, which reflects the strength of overall pricing.
In addition to cash flows from operations and liquid investments, it also has multiple credit facilities that provide up to $1,300.0 million and £52.2 million of collateralized standby letters of credit to support business written by Bermuda operating subsidiaries.
Recently, some other insurers like Alleghany Corporation and W. R. Berkley Corporation (WRB - Free Report) offered 3.250% $500 million senior notes and 3.150% $350 million senior notes, respectively, to capitalize on the low interest rate environment.
Shares of this Zacks Rank #4 (Sell) property and casualty insurer have gained 28.5%, outperforming the industry's increase of 23.2% in a year’s time. Its strong capital position and effective capital deployment are likely to drive shares going forward.
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Everest Re's (RE) Subsidiary Prices $1 Billion Senior Notes
Everest Re Group Ltd.’s wholly-owned unit, Everest Reinsurance Holdings, Inc. announced the pricing of $1 billion aggregate principal amount of senior notes. The notes carry an interest rate of 3.125% and are scheduled to mature in 2052.
The company aims to deploy the net proceeds from the senior notes for general corporate purposes and to meet its long-term strategic objectives.
The company issued senior notes amid a low interest rate environment to get more funds and enhance financial flexibility without affecting its liquidity. In the first half of 2021, Everest generated record operating cash flow that increased 45.5% year over year, reflecting the strength of premium growth. It exited the quarter with total investments and cash of $27.1 billion, which increased 6.3% from the 2020 level.
By capitalizing on the low interest rate environment, the company is also attempting to reduce its interest burden, thus facilitating margin expansion. Also, the company’s operational strength should enable it to service debt uninterruptedly, thereby maintaining the stock’s creditworthiness.
Its debt has been decreasing since 2017 with an improvement in debt to capital. However, as of Jun 30, 2021, the total debt of the company was about $1.9 billion, which increased 0.05% from 2020-end level. Nevertheless, the debt-to-capital ratio on Jun 30, 2021 was 15.5, which improved 90 basis points from 2020 end and compared favorably with the industry average of 19.5. However, the latest offering will increase the debt-to-capital ratio by 630 basis points.
Times interest earned of 29.9 at second-quarter end was good when compared with the fourth-quarter end figure of 17.1. The improvement in this ratio indicates that the firm will be able to meet current obligations in the near future without any difficulties.
The company’s capital position remains strong, with high-quality invested assets, significant liquidity, and low financial leverage. Its liquidity requirements are generally met from cash flow from operations. It generally expects annual positive cash flow from operations, which reflects the strength of overall pricing.
In addition to cash flows from operations and liquid investments, it also has multiple credit facilities that provide up to $1,300.0 million and £52.2 million of collateralized standby letters of credit to support business written by Bermuda operating subsidiaries.
Recently, some other insurers like Alleghany Corporation and W. R. Berkley Corporation (WRB - Free Report) offered 3.250% $500 million senior notes and 3.150% $350 million senior notes, respectively, to capitalize on the low interest rate environment.
Shares of this Zacks Rank #4 (Sell) property and casualty insurer have gained 28.5%, outperforming the industry's increase of 23.2% in a year’s time. Its strong capital position and effective capital deployment are likely to drive shares going forward.
Another Stock to Consider
Another top-ranked stock from the property and casualty insurance industry is American Financial Group, Inc. (AFG - Free Report) , sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial surpassed estimates in each of the last four quarters, the average surprise being 52.82%.