Everest Re (NYSE:RE) Group, Ltd. RE is poised for expansion on new business growth, strong renewal retention, continued favorable rate increases, a solid capital position and favorable growth estimates. These make Everest Re stock worth retaining in one’s portfolio.
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Everest Re has a decent track record of beating earnings estimates. It beat the Zacks Consensus Estimate in two of the last four reported quarters while missing in two, delivering an average four-quarter earnings surprise of 22.83%.
Zacks Rank & Price Performance
Everest Re currently carries a Zacks Rank #3 (Hold). Year to date, the stock has rallied 14.1%, outperforming the industry’s increase of 13.5%.
Growth Projections
The Zacks Consensus Estimate for Everest Re’s 2022 earnings is pegged at $32.13 per share, indicating a 15.4% increase from the year-ago reported figure on 11.8% higher revenues of $12.9 billion.
It has a favorable Growth Score of B.
Return on Equity
Return on equity (ROE), a profitability measure to identify how efficiently the company is utilizing its shareholders fund, has been improving over the last several years. Its trailing 12-month ROE of 7.5% is better than the industry average of 5.6%.
Style Score
Everest Re has an impressive VGM Score of A. This style score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and momentum.
Business Tailwinds
This seventh-largest global property and casualty reinsurer has diversified income streams. 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.
Everest Re is focused on building a portfolio, with a mix of product lines with better rate adequacy and higher long-term margins.
Everest Re is lowering exposure to areas not meeting the right risk-return profile and building a portfolio with a mix toward product lines with better rate adequacy and higher long-term margins. It is thus repositioning the portfolio by moving up fixed-income credit quality while lowering equity exposure.
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.
Effective Capital Deployment
Everest Re’s dividend has increased at a seven-year CAGR (2014-2021) of 10.9%, yielding 2.3%, better than the industry average of 0.4%. RE targets a total shareholder return of more than 13% by 2023.
Everest Re remains focused on deploying capital for organic growth as well as pursuing strategic acquisitions apart from buying back shares and paying out dividends.
Upbeat Guidance
Everest Re estimates the gross written premium of the Group 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%.
The combined ratio is estimated in the range of 91-93% 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%.
Stocks to Consider
Some better-ranked stocks from the same space include Hallmark Financial Services (NASDAQ:HALL) HALL, Kinsale Capital Group (NASDAQ:KNSL) KNSL and Berkshire Hathaway (BRK.B).
Hallmark Financial sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2022 earnings indicates a 30% year-over-year increase. Hallmark Financial delivered a four-quarter average earnings surprise of 53.62%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for 2022 earnings of Kinsale, sporting a Zacks Rank #1, indicates a 17% year-over-year increase. Kinsale delivered a four-quarter average earnings surprise of 37.63%.
Berkshire carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2022 earnings implies a 6.8% year-over-year increase. Berkshire delivered a four-quarter average earnings surprise of 5.53%.
Shares of HALL, KNSL and BRK.B have surged 20.8%, 12.1% and 27%, respectively, in a year.
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