The talk in insurance and reinsurance these days is almost always
about pricing. A lack of major catastrophes, higher retention rates from
insurance companies, and an influx of new capital has led to a lot of
money chasing the business that's out there, leading to double-digit
declines in prices. Everest Re (RE) seemed to withstand that in 2013, in part through new products and expanding outside peak areas.
Investors
seem to doubt that the company will be able to keep up double-digit
premium growth and double-digit returns on equity. It is probably true
that the rate of premium increases in areas like workers comp has to
slow, and likewise true that pricing will remain soft in reinsurance
without an event that destroys capital. Even so, the company's
underwriting history is pretty good and a long-term ROE of 11% suggests a
fair value close to $175, or roughly 15% above today's price.
Read more here:
Everest Re Looks To Surmount A More Competitive Environment
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