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Everest Re (RE) Rides on Solid Premium Growth and Liquidity

·4 min read

Everest Re Group, Ltd. RE has been gaining momentum on the back of new business opportunities, high retention rates and expense management.

Growth Projections

The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $25.62 and $30.43, indicating year-over-year increase of 243.4% and 18.8%, respectively.

Estimate Revision

The Zacks Consensus Estimate for 2021 and 2022 has moved 10.2% and 1% north, respectively in the past 30 days. This should instill investors' confidence in the stock.

Earnings Surprise History

Everest Re has a decent earnings surprise history. It beat estimates in two of the last four quarters and missed in the other two, with the average being 7.22%.

Zacks Rank & Price Performance

Everest Re currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 25.3%, compared with the industry’s increase of 40.2%.

Style Score

It has an impressive Growth Score of A. This style score helps analyze the growth prospects of a company. Also, it has an impressive Value Score of A, which reflects an attractive valuation of the stock.

The company has a favorable VGM Score of A. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.

Back-tested results show that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities.

Business Tailwinds

The company witnessed solid underwriting performance and premium growth in its Insurance segment. Factors like disciplined cycle management, new business opportunities, ongoing strong rate increases in business, and high retention rates on existing business are likely to drive the results of this segment. Favorable pricing is expected to continue in 2021.

Given its continued focus on higher rate, increased share in profitable deals along with new opportunities in property, casualty, specialty lines, and facultative business, we expect the Reinsurance segment to continue to perform well in the future.

Riding on continued focus on expense management, renewal rate increases, loss and expense ratio is likely to improve. This in turn will better the combined ratio of the insurer.

Its balance sheet strength reflecting improving leverage and sufficient liquidity poise the company well for profitable growth. Its debt to capital of 16.5% betters the industry average of 20.2%. Its times interest earned of 23.6 at first-quarter end remained higher than the fourth-quarter end figure of 17.1. Riding on strong premium growth year over year, its cash from operations in the first quarter of 2021 grew 78.6% year over year.

Its solid balance sheet with flexible liquidity enables efficient deployment of capital. This property and casualty insurer’s dividend increased at a seven-year CAGR (2014-2021) of 10.9%. Its dividend yield of 2.4% betters the industry average of 0.4%.

Other Stocks to Consider

Some other top-ranked property and casualty insurers include HCI Group, Inc. HCI, Cincinnati Financial Corporation CINF and Alleghany Corporation Y. While HCI Group sports a Zacks Rank #1, Cincinnati Financial and Alleghany carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of HCI Group surpassed estimates in three of the last four quarters and missed in the other one, the average being 42.91%.

Cincinnati Financial surpassed estimates in three of the last four quarters and missed in the other one, the average earnings surprise being 17.63%.

Alleghany’s earnings surpassed estimates in each of the last four quarters, the average being 128.63%.

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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

Everest Re Group, Ltd. (RE) : Free Stock Analysis Report

HCI Group, Inc. (HCI) : Free Stock Analysis Report

Alleghany Corporation (Y) : Free Stock Analysis Report

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Zacks Investment Research