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Why Should You Hold Everest Re (RE) Stock Right Now?

Everest Re Group, Ltd. RE has successfully met the ever-changing demands and expectations of its clients, building a solid product and service portfolio over the years. The company remains on track to retain the momentum for a better performance in future.

Everest Re’s Insurance segment has been witnessing an improvement in gross premiums written, driven by initiatives like product diversification and expansion of the property insurance geographic footprint. Notably, the second quarter of 2017 saw the highest level of quarterly gross written premium realized. We expect such strategic initiatives to drive the premiums even higher.

Further, Mt. Logan Re – one of the key growth drivers of the property and casualty (P&C) insurer – has displayed a significant progress in Asset Under Management (AUM) and remains the fastest growing capital market vehicle.

An increase in AUM will help Everest Re execute and enhance its long-term capital management and business scheme. In addition, introduction of several reinsurance products like the Purple Everest Color Product is expected to benefit this Zacks Rank #3 (Hold) property and casualty (P&C) insurer to a large extent in future.

The company is also well-poised to benefit from capital adequacy, financial flexibility, long-term operating performance and traditional risk management capabilities. Besides, Everest Re’s prudent capital management plan and robust capital balance position should help it further continue dividend payouts and share buybacks.

Shares of Everest Re have rallied 22.49% year to date, significantly outperforming the industry’s increase of 7.86%. We expect both bottom-line and top-line growth, along with improving premiums and robust capital position, to drive the stock higher in the near term as well.

However, exposure to catastrophe losses seems a headwind and might shortly affect the company’s earnings. Also, the P&C insurer has been witnessing expenses on the rise for the past few years and the situation does not appear to subside soon.

Nonetheless, valuation is attractive at present as the stock is currently trading at a price to book multiple of 1.27 over a period of one year, a 14.8% discount to the industry average of 1.49.

Besides, the company has a trailing 12-month return on equity (ROE) of 13.6%, higher than the industry’s 6.5% average. Plus, the insurer’s expected long-term earnings growth is pegged at 10.00%.

Stocks to Consider

Some better-ranked stocks from the insurance industry are American Financial Group, Inc. AFG, CNO Financial Group, Inc. CNO and Argo Group International Holdings, Ltd. AGII, each carrying a Zacks Rank #2 (Buy). You can see _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Financial provides property and casualty insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 17.03%.

CNO Financial develops, markets and administers health insurance, annuity, individual life insurance and other insurance products for senior and middle-income markets in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.69%.  

Argo Group underwrites specialty insurance and reinsurance products in the property and casualty market worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 26.51%.

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CNO Financial Group, Inc. (CNO): Free Stock Analysis Report
Everest Re Group, Ltd. (RE): Free Stock Analysis Report
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American Financial Group, Inc. (AFG): Free Stock Analysis Report
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