Everest Group

Methodology

Everest Group's reinsurance business shows significant earnings volatility from catastrophe losses and underwriting cycles, requiring normalized assumptions for fair value. The company can swing between strong profitability and catastrophic losses within years. Fair value calculations work best using mid-cycle combined ratios (low 90s) rather than current year results influenced by natural disaster severity.

Methodology

Everest typically trades at low PEG ratios (0.5-1.2x) reflecting reinsurance industry cyclicality and catastrophe loss uncertainty. Hard market pricing cycles temporarily boost earnings growth but inevitably normalize. PEG misleads for reinsurers because underwriting profits swing with catastrophe frequency and pricing cycles rather than sustainable business improvement.

Methodology

Everest pays a dividend yielding 2-3% that provides return stability during soft underwriting markets, making PEGY more attractive than PEG. The company balances dividends with capital retention for growth opportunities during hard markets. Total return combines underwriting cycle leverage with steady dividend income from conservative capital management.