Everest Re (RE) Rises 17% YTD: Will the Bull Run Continue?
Shares of Everest Re Group RE have rallied 16.7% year to date, outperforming the industry’s increase of 0.3%. The Finance sector and the Zacks S&P 500 composite have increased 7% and 6.2%, respectively, in the same time frame. With a market capitalization of $15.1 billion, the average volume of shares traded in the last three months was about 0.3 million.
New business growth, strong renewal retention, continued favorable rate increases and a solid capital position continue to drive this Zacks Rank #1 (Strong Buy) insurer. The seventh-largest global property and casualty reinsurer has a decent history of delivering positive surprises in the last four reported quarters.
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Can it Retain the Momentum?
The Zacks Consensus Estimate for Everest Re’s 2023 earnings is pegged at $45.16 per share, indicating a 66.8% increase from the year-ago reported figure on 13.1% higher revenues of $14.2 billion. The consensus estimate for 2024 earnings is pegged at $51.60 per share, indicating a 14.3% increase from the year-ago reported figure on 8.4% higher revenues of $15.4 billion.
The expected long-term earnings growth rate is 24.4%, better than the industry average of 13.4%. It has a Growth Score of B.
Everest Re’s focus on having a mix of product lines with better rate adequacy and higher long-term margins bodes well for growth. Its diversified income streams ensure profitability. The insurer estimates gross written premium to witness a three-year CAGR of 10-15%.
The Insurance segment stands to benefit from new business growth, strong renewal retention and continued favorable rate increases. RE estimates gross written premium at this segment to record a three-year CAGR of 8-22%.
Strategic partnerships with core clients and its position as a preferred reinsurance partner poise the Reinsurance segment well for growth. RE estimates gross written premium at this segment to witness a three-year CAGR of 8-12%.
Given prudent underwriting, RE aims for a low-90 combined ratio in 2023.
Everest Re boasts a strong capital position, with sufficient cash generation capabilities and benefits from capital adequacy, financial flexibility, long-term operating performance and traditional risk management capabilities.
These, in turn, help in deploying capital for organic growth, as well as pursuing strategic acquisitions apart from buying back shares and paying out dividends.
Sustained solid operational excellence coupled with a strong capital position aids Everest Re to enhance shareholders’ value. RE has increased dividends at a nine-year CAGR (2014-2022) of 9.2% and targets a total shareholder return of more than 13% by 2023.
Though RE’s long-term debt has been increasing over the last few years, it aims for a long-term debt-leverage ratio between 15% and 20%. Return on invested assets is projected between 2.75% and 3.25%.
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 12.4% is better than the industry average of 5.6%.
The Zacks Consensus Estimate for 2023 and 2024 has moved 2.3% and 0.9% north, respectively, in the past seven days, reflecting analyst optimism.
Everest Re has a VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
It also has a Value Score of A. Back-tested results have shown that stocks with a Value Score of A or B, combined with a Zacks Rank #1 or #2 (Buy), offer better returns.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited AXS, RenaissanceRe Holdings (RNR) and CNA Financial Corporation CNA. While Axis Capital and RenaissanceRe sport a Zacks Rank #1, CNA Financial carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for both 2023 and 2024 has moved 0.1% north in the past seven days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.53 and $8.42, indicating year-over-year increases of 29.6% and 11.7%, respectively. In the past year, AXS has gained 8.9%.
The Zacks Consensus Estimate for RenaissanceRe’s 2023 and 2024 earnings per share is pegged at $23.31 and $26.80, indicating year-over-year increases of 219.3% and 15%, respectively. In the past year, RNR has gained 11.8%.
RNR beat estimates in two of the past four quarters, while missing in the other two.
The Zacks Consensus Estimate for CNA Financials’ 2023 and 2024 earnings per share is pegged at $4.25 and $4.41, indicating year-over-year increases of 10.6% and 3.8%, respectively. In the past year, CNA has lost 0.6%.
The Zacks Consensus Estimate for CNA’s 2023 and 2024 earnings has moved 4.2% and 14.8% north, respectively, in the past 30 days.
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RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
CNA Financial Corporation (CNA) : Free Stock Analysis Report
