We are downgrading our recommendation on shares of Everest Re (RE) as we believe that its top-line growth will remain somewhat restricted due to the expected decline in the casualty line as a result of tough market conditions. Additionally, the potential for future reserve additions remains a challenge.
Everest estimates its first quarter 2011 pre-tax losses to range between $140 million and $210 million, owing to the deadly February 2011 New Zealand earthquake. The Australian floods will likely cause a gross loss of another $45 million to Everest Re, which writes 7% of its Reinsurance business in the Asia/Australia region.
While the company expects its property line to post growth, the casualty line is expected to continue to decline due to the ongoing tough market conditions. The extent of increased competition and its effect on rates, terms and conditions varies widely by market and coverage, but are most prevalent in the U.S. casualty insurance and reinsurance markets.
EVEREST RE LTD (RE): Free Stock Analysis Report
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