8. Everest Group, Ltd. (NYSE:EG)
Forward P/E: 6.98
No. of Hedge Fund Holders: 47
Everest Group, Ltd. (NYSE:EG) is a global insurance and reinsurance company. It provides a wide range of property and casualty (P&C) insurance solutions. Everest offers comprehensive coverage for both personal and commercial lines, including risks related to property damage, liability, and other specialized needs. The company focuses on delivering tailored solutions, assisting businesses to manage their exposure to risk.
On February 4, Barclays analyst Alex Scott upgraded the price target of EG shares from $461 to $471 per share, reiterating a Buy rating on the stock. Despite mixed results in Q4 2024, the analyst remains optimistic as the company’s long-term profitability remains stable. Everest Group, Ltd. (NYSE:EG) posted a strong operating income of $1.3 billion for FY2024, achieving a 9% operating ROE. Premium growth in Q4 was solid at 12.6%, supported by strong execution with core clients and selective expansion in specialty underwriting areas. The company increased its net investment income to $473 million during the last quarter, driven by higher assets under management and a stable book yield of 4.7%.
Vulcan Value Partners stated the following regarding Everest Group, Ltd. (NYSE:EG) in its Q4 2024 investor letter:
“We purchased one new position during the quarter: Everest Group, Ltd. (NYSE:EG). Everest Group is a global reinsurance and insurance business known for its disciplined cost structure and high-quality underwriting. Insurance is an inherently cyclical business. “Hard markets” occur when premium prices are high relative to insured risks. Hard markets inevitably attract more capital to the industry, causing premium prices to fall relative to insured risks, which results in a “soft market.” Soft markets lead undisciplined underwriters to post underwriting losses, removing capital from the industry, and the cycle repeats. In evaluating insurance companies, we believe that growth in tangible book value per share more closely approximates growth in intrinsic value per share than does growth in earnings per share. Compounding book value per share requires underwriting discipline. Moreover, given the cyclical nature of the business, a disciplined underwriter will have more volatile earnings in the short run than an undisciplined underwriter. Everest Group underwrites aggressively in hard markets and builds underwriting capacity during soft markets. During the most recent hard market, the company has significantly grown book value per share. We applaud Everest Group’s emphasis on growing intrinsic value per share over the long term instead of managing short-term earnings per share. We first purchased Everest Group, then called Everest Re, in our Small Cap portfolio where we held it for over thirteen years. It grew into a large-cap company, and we owned it in our Large-cap portfolio for over ten years. We are pleased to be able to add Everest Group to our Focus portfolio with a margin of safety to our estimate of intrinsic value.”
