We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is it Time to Add Everest Re (RE) Stock to Your Portfolio?
Read MoreHide Full Article
Everest Re Group Ltd. is poised to grow on the strength of new business growth, strong renewal retention, continued favorable rate increases and a solid capital position. These, coupled with optimistic growth projections, make RE stock worth adding to one’s portfolio.
This seventh-largest global property and casualty reinsurer has a decent history of delivering positive surprises in three of the last four reported quarters.
RE has a 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 have shown that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy), offer better returns.
Zacks Rank & Price Performance
Everest Re currently carries a Zacks Rank #2. In a year, the stock has rallied 20.2% compared with the industry’s growth of 2%.
Image Source: Zacks Investment Research
Growth Projections
The Zacks Consensus Estimate for 2023 earnings indicates an improvement of 77.2% from the year-ago reported figure on 12.5% higher revenues.
The expected long-term earnings growth is pegged at 13.5%, outperforming the industry average of 9.7%.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 has moved about 4% north in the past 30 days, reflecting analyst optimism.
Growth Drivers
Everest Re has diversified income streams to ensure profitability, with a focus on having a mix of product lines with better rate adequacy and higher long-term margins.
While the Insurance segment should benefit from new business growth, strong renewal retention and continued favorable rate increases, the Reinsurance segment is poised to grow on partnerships with core clients and its position as a preferred reinsurance partner.
A strong capital position, with sufficient cash generation capabilities, benefits Everest Re in terms of 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.
Shareholders’ Return
Everest Re’s dividend has increased at a nine-year CAGR (2014-2022) of 9.2%. RE targets a total shareholder return of more than 13% by 2023. Return on invested assets is projected between 2.75% and 3.25%, while the long-term debt leverage ratio is projected between 15% and 20%.
Return on equity (ROE), a profitability measure to identify how efficiently a company is utilizing its shareholders fund, has been improving over the last several years. RE’s trailing 12-month ROE of 7.5% is better than the industry average of 5.6%.
Upbeat Guidance
Everest Re estimates gross written premium to witness a three-year CAGR of 10-15%. The Reinsurance segment is expected to witness 8-12% growth while the Insurance segment is likely to witness a three-year CAGR of 8-22%.
RE aims a low-90 combined ratio in 2023.
Return on invested assets is projected between 2.75% and 3.25%, while the long-term debt leverage ratio is projected between 15% and 20%.
Image: Bigstock
Is it Time to Add Everest Re (RE) Stock to Your Portfolio?
Everest Re Group Ltd. is poised to grow on the strength of new business growth, strong renewal retention, continued favorable rate increases and a solid capital position. These, coupled with optimistic growth projections, make RE stock worth adding to one’s portfolio.
This seventh-largest global property and casualty reinsurer has a decent history of delivering positive surprises in three of the last four reported quarters.
RE has a 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 have shown that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy), offer better returns.
Zacks Rank & Price Performance
Everest Re currently carries a Zacks Rank #2. In a year, the stock has rallied 20.2% compared with the industry’s growth of 2%.
Image Source: Zacks Investment Research
Growth Projections
The Zacks Consensus Estimate for 2023 earnings indicates an improvement of 77.2% from the year-ago reported figure on 12.5% higher revenues.
The expected long-term earnings growth is pegged at 13.5%, outperforming the industry average of 9.7%.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 has moved about 4% north in the past 30 days, reflecting analyst optimism.
Growth Drivers
Everest Re has diversified income streams to ensure profitability, with a focus on having a mix of product lines with better rate adequacy and higher long-term margins.
While the Insurance segment should benefit from new business growth, strong renewal retention and continued favorable rate increases, the Reinsurance segment is poised to grow on partnerships with core clients and its position as a preferred reinsurance partner.
A strong capital position, with sufficient cash generation capabilities, benefits Everest Re in terms of 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.
Shareholders’ Return
Everest Re’s dividend has increased at a nine-year CAGR (2014-2022) of 9.2%. RE targets a total shareholder return of more than 13% by 2023. Return on invested assets is projected between 2.75% and 3.25%, while the long-term debt leverage ratio is projected between 15% and 20%.
Return on equity (ROE), a profitability measure to identify how efficiently a company is utilizing its shareholders fund, has been improving over the last several years. RE’s trailing 12-month ROE of 7.5% is better than the industry average of 5.6%.
Upbeat Guidance
Everest Re estimates gross written premium to witness a three-year CAGR of 10-15%. The Reinsurance segment is expected to witness 8-12% growth while the Insurance segment is likely to witness a three-year CAGR of 8-22%.
RE aims a low-90 combined ratio in 2023.
Return on invested assets is projected between 2.75% and 3.25%, while the long-term debt leverage ratio is projected between 15% and 20%.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are First American Financial Corporation (FAF - Free Report) , RenaissanceRe Group (RNR - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
First American has a solid track record of beating earnings estimates in each of the last six quarters. In the past year, FAF has lost 23%.
The Zacks Consensus Estimate for FAF’s 2023 earnings has moved 3.9% north in the past 60 days.
RenaissanceRe’s earnings surpassed estimates in two of the last four quarters. In the past year, RNR has gained 15%.
The Zacks Consensus Estimate for RNR’s 2023 earnings implies a year-over-year rise of 302.4%.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average being 15.16%. In the past year, KNSL has gained 48.1%.
The Zacks Consensus Estimate for KNSL’s 2023 earnings implies a year-over-year rise of 22.6%.