We are downgrading our recommendation on Everest Re (RE) to Underperform. The company recently announced its initial loss estimates from the earthquake in Chile and the European Windstorm Xynthia. The losses are substantial.
Also, the company’s fourth quarter earnings missed the Zacks Consensus Estimate, primarily as a result of prior-year reserve additions. Going forward, the casualty line and the marine books are expected to decline due to tough market conditions.
Additionally, the potential for future reserve additions also remains a challenge. Our six-month target price of $72.00 per share equates to 8.5X our earnings estimate for 2010.Zacks Investment Research
