Everest Re Group, Ltd. RE is well-poised for growth, driven by new business opportunities, rate increases, solid renewal retention and higher limited partnership income.
The Zacks Consensus Estimate for Everest Re’s 2022 and 2023 earnings per share is pegged at $34.2 and $40.3, indicating a respective year-over-year increase of 18.2% and 17.6%. The expected long-term earnings growth rate is 9.9%.
Earnings Surprise History
Everest Re has a solid track record of beating earnings estimates in four of the last seven quarters.
Zacks Rank & Price Performance
Everest Re currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 3.7% against the industry’s decrease of 1.8%.
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Everest Re 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.
Return on Equity
Everest Re’s trailing 12-month return on equity (ROE) was 13%, up 890 basis points year over year. It compares favorably with the industry average of 5.7%. ROE reflects its efficiency in using shareholders’ funds.
Everest Re is witnessing a positive trend in net premiums earned and net investment income, driven by solid performance across its Reinsurance and Insurance operations segments.
Increased exposure and new business opportunities led by the recovery of the U.S. economy, continued double-digit rate increases, expanded shares on attractive renewals, and strong renewal retention are likely to boost the growth of Reinsurance and Insurance operations.
Higher income from the fixed-income portfolio, increase in limited partnership income, higher dividend income from the equity portfolio and increased income from other invested assets are likely to drive net investment income in the coming quarters.
The loss and expense ratio is likely to improve with a continued focus on expense management and renewal rate increases. This in turn will better the combined ratio of the insurer. The reinsurance expense ratio is estimated to remain under 3% for 2022.
The insurer should gain from strong profitability, underlying operating cash flow and balance sheet liquidity. In the first quarter of 2022, Everest Re continued to generate a strong operating cash flow of $846 million, enabling the insurer to invest in a rising rate environment.
Solid Capital Deployment
Earlier this month, Everest Re approved a 6.4% hike in its quarterly dividend to return more profits to stockholders. RE boasts a consistent increase in dividends, with the metric witnessing a nine-year CAGR (2014-2022) of 9.2%. The current dividend yield of 2.2% betters the industry average of 0.4%, thus making the stock an attractive pick for yield-seeking investors.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance sector are W.R. Berkley Corporation WRB, American Financial Group, Inc. AFG and Cincinnati Financial Corporation CINF. While W.R. Berkley currently sports a Zacks Rank #1(Strong Buy), American Financial and Cincinnati Financial carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.08%. In the past year, the W.R. Berkley stock has increased 27.9%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.3% and 6.2% north, respectively, in the past 30 days.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has rallied 13.4%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past seven days.
The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 32.55%. In the past year, the insurer has rallied 6.9%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 3.6% and 1.7% north, respectively, in the past 30 days.
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