EG: Improved Reserve Clarity Will Support Margin Expansion After Reserve Charge

Everest Group's fair value estimate has been revised downward by analysts to approximately $368.86 per share from $374.21. This change reflects a reassessment of reserve charges and changes in sector outlook following the latest quarterly results.

Analyst Commentary

Analysts remain divided on the outlook for Everest Group following its recent financial results and sector developments. While some see the company positioned for stability and growth, others cite macro and company-specific factors that temper optimism.

Bullish Takeaways

• Bullish analysts point to upward price target revisions, highlighting the company's relative resilience in a quarter marked by limited catastrophe events and manageable macroeconomic uncertainty.
• Clarity around reserve adequacy and the response to the recent share price selloff have contributed to improved sentiment among some analysts. One notable shift moved from a negative to a neutral stance.
• The outlook for U.S. insurance operations appears stable. This view is supported by lighter property renewal mixes, which are expected to help pricing in select commercial lines.
• Broader sector updates suggest that strategic adjustments in underwriting and pricing could support long-term earnings and growth, and help ensure competitiveness amid changing industry dynamics.

Bearish Takeaways

• Bearish analysts emphasize the impact of a $478 million reserve charge, primarily tied to U.S. casualty reserves in the Insurance segment. This is seen as a near-term overhang on valuation and investor sentiment.
• Concerns persist regarding inadequate pricing in certain commercial auto and casualty lines, which may pressure margins if not addressed proactively.
• The sector faces broader headwinds, with some expecting the cost of capital to surpass return on capital over the next several years. This dynamic could limit opportunities for robust margin expansion.
• While some share price targets were maintained or modestly increased, at least one newly initiated rating adopted a distinctly cautious outlook. This reflects execution risks and the need for clear improvements in profitability measures.

What's in the News

• Everest Group, Ltd. announced the appointment of Elias Habayeb as Executive Vice President and Group Chief Financial Officer effective on or about May 1, 2026. He will succeed Mark Kociancic, who will retire after the first quarter reporting cycle but remain as special advisor during the transition period. (Key Developments)
• The company has entered into definitive agreements to sell the renewal rights for its Global Retail Commercial Insurance business to American International Group Inc., shifting focus to its core global Reinsurance and Global Wholesale and Specialty Insurance segments. (Key Developments)
• An adverse development reinsurance agreement has been reached with Longtail Re (a Stone Ridge affiliate), effective October 1, 2025. This agreement provides $1.2 billion of gross limit protection for Everest Insurance's North American business. (Key Developments)
• The company completed the repurchase of 32,576,964 shares for $4,337.93 million under a long-standing buyback program. (Key Developments)

Valuation Changes

• Fair Value Estimate: Lowered slightly to $368.86 per share from $374.21 per share, reflecting recent sector and company-specific developments.
• Discount Rate: Remained effectively unchanged at 6.96%.
• Revenue Growth: Projected decline has widened, with estimates moving from -6.03% to -7.83%.
• Net Profit Margin: Marginally improved and now forecast at 23.98% compared to the previous 23.79%.
• Future P/E: Expected price-to-earnings multiple has increased modestly to 5.30x from 5.12x.