Everest Re Group, Ltd (RE - Free Report) appears to be well poised for growth driven by product diversification, healthy capital position and financial flexibility.
Estimates for Everest Re Group have been revised upward over the past 60 days, reflecting analysts’ confidence in the stock. The Zacks Consensus Estimate for 2019 earnings per share has moved 1.8% up in the said time frame. The company also has a decent history of beating estimates in three of the last four quarters with the average beat being 20.66%.
Shares of Everest Re Group have rallied 21.5% year to date, outperforming the industry’s growth of 6.2%.
This Zacks Rank #3 (Hold) property and casualty insurer operates through Insurance and Reinsurance segments. The performance of the Insurance segment has been stable for the past few years. It is expected that the company will derive more benefits from ongoing developments like product diversification, staffing up of operations and expansion of international insurance. The segment has been witnessing steady premium growth over the past few years. The trend continued in the first half of 2019 with premium rising 17% year over year. A European operating platform has been opened recently for the expansion of global underwriting operation.
The Reinsurance segment has also managed to outperform the broader market. Development of strategic partnerships, various product offerings, hedging abilities and distribution facilities aided the company in making the most of the opportunities, which drove segment growth. Premiums increased 3% in the first half of 2019.
The company boasts a solid capital position, financial flexibility and long-term operating performance. Banking on operational excellence, the company has been hiking dividend each year (CAGR of 23.9% from 2013 to 2018). Everest Re’s dividend yield of 2.1% betters the industry average of 1.1%. These endeavors make the stock an attractive pick for yield-seeking investors.
Higher returns on fixed income portfolio along with increase in limited partnership income led to 14.4% increase in investment income in the first half of 2019.
However, Everest Re is exposed to the challenges faced by the reinsurance market. These include average market rates and competitive conditions, which push the rates lower and commissions higher.
Everest Re is also exposed to catastrophe loss, which dampens earnings. Irrespective of catastrophe mitigation techniques deployed by the company, exposure to weather-related calamities makes its earnings volatile. This remains a concern for Everest Re.
The Zacks Consensus Estimate for 2019 earnings per share is pegged at $24.94, indicating increase of nearly 436.34% from the year-ago reported figure. The expected long-term earnings growth rate is pegged at 10%.
Stocks to Consider
Some better-ranked property and casualty insurance stocks include Hallmark Financial Services (HALL - Free Report) , Palomar Holdings (PLMR - Free Report) and W.R. Berkley Corporation (WRB - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hallmark Financial Services underwrites, markets, distributes and services property and casualty insurance products in the United States. The company came up with an average four-quarter positive surprise of 97.5%.
Palomar Holdings provides personal and commercial specialty property insurance products. The company delivered an average four-quarter positive surprise of 25%.
W.R. Berkley Corporation operates through two segments and works as commercial lines writer in the United States and internationally. The company delivered an average four-quarter positive surprise of 34.53%.
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