Critical Analysis: Third Point Reinsurance (TPRE) vs. Everest Re Group (RE)

Third Point Reinsurance (NYSE: TPRE) and Everest Re Group (NYSE:RE) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitabiliy, institutional ownership, dividends and analyst recommendations.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Third Point Reinsurance and Everest Re Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Third Point Reinsurance 0 2 1 0 2.33
Everest Re Group 2 4 1 0 1.86

Third Point Reinsurance currently has a consensus target price of $15.00, suggesting a potential upside of 2.74%. Everest Re Group has a consensus target price of $241.00, suggesting a potential downside of 9.65%. Given Third Point Reinsurance’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Third Point Reinsurance is more favorable than Everest Re Group.

Profitability

This table compares Third Point Reinsurance and Everest Re Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Third Point Reinsurance 21.30% 12.53% 4.55%
Everest Re Group 18.49% 12.70% 4.77%

Earnings and Valuation

This table compares Third Point Reinsurance and Everest Re Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Third Point Reinsurance $861.79 million 1.78 $180.47 million $1.72 8.49
Everest Re Group $6.04 billion 1.81 $1.10 billion $26.88 9.92

Everest Re Group has higher revenue and earnings than Third Point Reinsurance. Third Point Reinsurance is trading at a lower price-to-earnings ratio than Everest Re Group, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Third Point Reinsurance has a beta of 1.22, meaning that its stock price is 22% more volatile than the S&P 500. Comparatively, Everest Re Group has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500.

Dividends

Everest Re Group pays an annual dividend of $5.00 per share and has a dividend yield of 1.9%. Third Point Reinsurance does not pay a dividend. Everest Re Group pays out 18.6% of its earnings in the form of a dividend. Everest Re Group has raised its dividend for 4 consecutive years.

Institutional and Insider Ownership

68.7% of Third Point Reinsurance shares are owned by institutional investors. Comparatively, 92.5% of Everest Re Group shares are owned by institutional investors. 36.9% of Third Point Reinsurance shares are owned by company insiders. Comparatively, 1.3% of Everest Re Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Everest Re Group beats Third Point Reinsurance on 10 of the 16 factors compared between the two stocks.

About Third Point Reinsurance

Third Point Reinsurance Ltd. is a holding company. Through the Company’s reinsurance subsidiaries, it provides property and casualty reinsurance coverage to insurance and reinsurance companies. The Company’s segments include Property and Casualty Reinsurance, and Corporate. The Company’s investable assets are managed by its investment manager, Third Point LLC. The Company also writes reinsurance contracts that provide protection against adverse development on loss reserves. Through Third Point LLC, the Company makes investments globally in all sectors, and in equity, credit, commodity, currency, options and other instruments. The Company also acts as the underwriter for the majority of the premium that it underwrites. The Company writes reinsurance contracts covering product lines, such as property, workers’ compensation, auto, general liability, professional liability, credit and financial lines, and multi-line.

About Everest Re Group

Everest Re Group, Ltd., through its subsidiaries, is engaged in the underwriting of reinsurance and insurance in the United States, Bermuda and international markets. The Company operates in segments: U.S. Reinsurance, International, Bermuda and Insurance segment. The Company underwrites reinsurance both through brokers and directly with ceding companies. The Company underwrites insurance principally through general agent relationships, brokers and surplus lines brokers. The Company offers treaty and facultative reinsurance, and admitted and non-admitted insurance. Its products include the range of property and casualty reinsurance, and insurance coverage’s, including marine, aviation, surety, errors and omissions liability (E&O), directors’ and officers’ liability (D&O), medical malpractice, other specialty lines, accident and health (A&H) and workers’ compensation. Its subsidiaries include Everest Reinsurance (Bermuda), Ltd. (Bermuda Re) and Everest International Reinsurance, Ltd.

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