Thursday, March 24, 2016

Seeking Alpha: Is Everest Re Watering The Weeds?

"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?

No comments: