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Everest Re (RE) Gains 10% YTD: Will the Rally Continue?
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Shares of Everest Re Group have gained 10.1% year to date, outperforming the industry’s increase of 1.6%. While the Finance sector has declined 1.1%, the Zacks S&P 500 composite has gained 9.1% in the same time frame. With a market capitalization of $15.8 billion, the average volume of shares traded in the last three months was about 0.4 million.
New business growth, strong renewal retention, continued favorable rate increases, solid capital position and upbeat guidance continue to drive RE. This seventh-largest global property and casualty reinsurer has a decent history of delivering positive surprises in three of the last four reported quarters, while missing in one, the average being 10.09%. Earnings grew 16.6% over the last five years, better than the industry average of 16.5%.
RE has a VGM Score of B and carries a Zacks Rank #3 (Hold).
Return on equity (ROE), a profitability measure to identify how efficiently a company is utilizing its shareholders’ funds, has been improving over the last several years. RE’s trailing 12-month ROE of 13% is much better than the industry average of 6.9%.
Image Source: Zacks Investment Research
Can It Retain the Bull Run?
The Zacks Consensus Estimate for Everest Re’s 2023 earnings is pegged at $43.69 per share, indicating a 61.3% increase from the year-ago reported figure. The revenue estimate of $14.9 billion indicates an increase of 18.7% year over year. The consensus estimate for 2024 earnings is pegged at $54.59 per share, indicating a 24.9% increase from the year-ago reported figure on 13.4% higher revenues of $16.9 billion.
The expected long-term earnings growth rate is 29%, outperforming the industry average of 13.7%. It has a Growth Score of B.
RE’s gross premium written has been improving over the last many years on the strength of its segments. The insurer estimates gross written premium to witness a three-year CAGR of 10-15%.
New business growth, strong renewal retention and continued favorable rate increases strategic partnerships with core clients continue to drive the Insurance segment. RE estimates gross written premium in the Insurance segment to grow at a three-year CAGR of 18-22%.
RE’s position as a preferred reinsurance partner poises the Reinsurance segment well for growth. RE estimates gross written premium in the Reinsurance segment to grow at a three-year CAGR of 8-12%.
RE’s focus on having a mix of product lines with better rate adequacy and higher long-term margins bodes well for growth. A diversified income stream ensures profitability.
Everest Re boasts a strong capital position, banking on sufficient cash generation capabilities and benefits from capital adequacy, financial flexibility, long-term operating performance and traditional risk management capabilities.
Sustained solid operational excellence and a strong capital position aid Everest Re in enhancing shareholders’ value. RE has increased dividends at an eight-year CAGR (2015-2022) of 7.1% and targets a total shareholder return of more than 13% by 2023, reflecting robust and well-diversified earnings power.
Given prudent underwriting, RE aims for a low-90 combined ratio in 2023. Return on invested assets is projected between 2.75% and 3.25%. The insurer targets a long-term debt-leverage ratio between 15% and 20%.
Stocks to Consider
Some top-ranked stocks from the insurance industry are RLI Corporation (RLI - Free Report) , Kinsale Capital Group (KNSL - Free Report) and Berkshire Hathaway (BRK.B - Free Report) .
RLI delivered a four-quarter average earnings surprise of 43.50%. Year to date, the insurer has lost 1.8%.
Kinsale delivered a four-quarter average earnings surprise of 14.77%. Year to date, the insurer has gained 23.8%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings indicates a respective year-over-year increase of 32.9% and 19.7%. It sports a Zacks Rank #1.
Berkshire Hathaway delivered a four-quarter average earnings surprise of 20.29%. Year to date, the insurer has gained 3%.
The Zacks Consensus Estimate for BRK.B’s 2023 and 2024 earnings indicates a respective year-over-year increase of 35.8% and 1.3%. It carries a Zacks Rank #2 (Buy).
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Everest Re (RE) Gains 10% YTD: Will the Rally Continue?
Shares of Everest Re Group have gained 10.1% year to date, outperforming the industry’s increase of 1.6%. While the Finance sector has declined 1.1%, the Zacks S&P 500 composite has gained 9.1% in the same time frame. With a market capitalization of $15.8 billion, the average volume of shares traded in the last three months was about 0.4 million.
New business growth, strong renewal retention, continued favorable rate increases, solid capital position and upbeat guidance continue to drive RE. This seventh-largest global property and casualty reinsurer has a decent history of delivering positive surprises in three of the last four reported quarters, while missing in one, the average being 10.09%. Earnings grew 16.6% over the last five years, better than the industry average of 16.5%.
RE has a VGM Score of B and carries a Zacks Rank #3 (Hold).
Return on equity (ROE), a profitability measure to identify how efficiently a company is utilizing its shareholders’ funds, has been improving over the last several years. RE’s trailing 12-month ROE of 13% is much better than the industry average of 6.9%.
Image Source: Zacks Investment Research
Can It Retain the Bull Run?
The Zacks Consensus Estimate for Everest Re’s 2023 earnings is pegged at $43.69 per share, indicating a 61.3% increase from the year-ago reported figure. The revenue estimate of $14.9 billion indicates an increase of 18.7% year over year. The consensus estimate for 2024 earnings is pegged at $54.59 per share, indicating a 24.9% increase from the year-ago reported figure on 13.4% higher revenues of $16.9 billion.
The expected long-term earnings growth rate is 29%, outperforming the industry average of 13.7%. It has a Growth Score of B.
RE’s gross premium written has been improving over the last many years on the strength of its segments. The insurer estimates gross written premium to witness a three-year CAGR of 10-15%.
New business growth, strong renewal retention and continued favorable rate increases strategic partnerships with core clients continue to drive the Insurance segment. RE estimates gross written premium in the Insurance segment to grow at a three-year CAGR of 18-22%.
RE’s position as a preferred reinsurance partner poises the Reinsurance segment well for growth. RE estimates gross written premium in the Reinsurance segment to grow at a three-year CAGR of 8-12%.
RE’s focus on having a mix of product lines with better rate adequacy and higher long-term margins bodes well for growth. A diversified income stream ensures profitability.
Everest Re boasts a strong capital position, banking on sufficient cash generation capabilities and benefits from capital adequacy, financial flexibility, long-term operating performance and traditional risk management capabilities.
Sustained solid operational excellence and a strong capital position aid Everest Re in enhancing shareholders’ value. RE has increased dividends at an eight-year CAGR (2015-2022) of 7.1% and targets a total shareholder return of more than 13% by 2023, reflecting robust and well-diversified earnings power.
Given prudent underwriting, RE aims for a low-90 combined ratio in 2023. Return on invested assets is projected between 2.75% and 3.25%. The insurer targets a long-term debt-leverage ratio between 15% and 20%.
Stocks to Consider
Some top-ranked stocks from the insurance industry are RLI Corporation (RLI - Free Report) , Kinsale Capital Group (KNSL - Free Report) and Berkshire Hathaway (BRK.B - Free Report) .
RLI delivered a four-quarter average earnings surprise of 43.50%. Year to date, the insurer has lost 1.8%.
The Zacks Consensus Estimate for RLI’s 2023 earnings indicates a year-over-year increase of 4.1%. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale delivered a four-quarter average earnings surprise of 14.77%. Year to date, the insurer has gained 23.8%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings indicates a respective year-over-year increase of 32.9% and 19.7%. It sports a Zacks Rank #1.
Berkshire Hathaway delivered a four-quarter average earnings surprise of 20.29%. Year to date, the insurer has gained 3%.
The Zacks Consensus Estimate for BRK.B’s 2023 and 2024 earnings indicates a respective year-over-year increase of 35.8% and 1.3%. It carries a Zacks Rank #2 (Buy).