"Pulling the flowers and watering the weeds," was an expression that
Peter Lynch coined to refer to the habit of many companies of neglecting
or outright harming their best business so as to give more time,
attention and capital to inferior businesses - often in the hopes that
those inferior businesses would emerge as new sources of growth. That's
probably an unduly harsh assessment of Everest Re's (NYSE:RE)
ongoing commitment to grow its Insurance operations, but there's
nevertheless a stark contrast between the highly profitable Reinsurance
operations and the seemingly always-lagging Insurance business.
I remain unconvinced that Everest Re's insurance operations are going
to stage an impressive turnaround, but I'll at least acknowledge a
meaningful improvement in the loss ratio would offer some welcome upside
to the fair value. As is, I think the shares of this high-quality
reinsurance company are modestly undervalued as the company works its
way through what could prove to be an extended period of challenging
conditions in its core markets.
Read more here:
Is Everest Re Watering The Weeds?
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