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Everest Re: A Strong Buy

Zacks Equity Research

On Apr 4, 2013, Zacks Investment Research upgraded Everest Re Group Ltd. (RE) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Everest Re has been experiencing rising earnings estimates on the back of improved fourth-quarter 2012 results. Moreover, the company swung to profit in 2012, paving the way for a brighter outlook for 2013. Additionally, this property-casualty insurer delivered positive earnings surprises in all of the last 4 quarters with an average beat of 55.2%.

On Feb 6, Everest Re reported fourth-quarter 2012 operating earnings of 80 cents per share, which exceeded the Zacks Consensus Estimate of 50 cents and operating loss of 94 cents per share in the year-ago quarter. The results were supported by the Heartland acquisition along with higher premiums written in both Insurance and Reinsurance segments.

Overall, a 4% rise in gross premiums and 16% growth in net investment income blended well with a 7% decline in claims and expenses. These factors also improved the combined ratio and book value per share.

Favorable reinsurance market pricing raises optimism, while initiatives to aggressively expand in the international markets are likely to contribute significantly to the overall top line. Moreover, Everest Re’s conservative financial leverage enables financial flexibility and efficient capital deployment, thereby boosting shareholder value by 12% in 2012 and retaining confidence in the stock.

Based on Everest Re’s fundamental strength and claims management, the Zacks Consensus Estimate for 2013 rose 3.8% to $14.05 per share in the last 60 days, based on 7 upward estimate revisions. The estimate for 2014 is pegged at $15.09, up 2.9% in the last 60 days, based on 4 upward estimate revisions. Meanwhile, no downward revision in estimates was witnessed for both the years.

Other Stocks to Consider

Apart from Everest Re, other stocks that are outperforming in the insurance sector include Hilltop Holdings Inc. (HTH), XL Group Plc (XL) and Progressive Corp. (PGR). All these stocks carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on RE

Read the Full Research Report on XL

Read the Full Research Report on HTH

Read the Full Research Report on PGR

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