EVEREST GROUP, LTD. (EG): what the price requires

At today's price, EVEREST GROUP, LTD. (EG) is priced for 8.6% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Source: https://boothcheck.com/report/EG

Headline

FieldValue
TickerEG
CompanyEVEREST GROUP, LTD.
Current price$378.31/sh
CompositionReinsurance 76% / Insurance 24%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Return on equity needed8.6%
Return on equity now10.3%
ROE gap-1.7pp
Price-to-book0.98x

Solve inputs: computed at a 8.7% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1pp.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.45σ
cohort percentile (of 80 peers)14
sustained it ~10 years at this level80%
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple value, while growth-DCF lands below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset0.58x3justifies
Earnings0.48x2justifies
Relative0.22x3justifies
Growth1.66x1expensive

Families that justify the price: Asset, Earnings, Relative Families that call it expensive: Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.1%); the inversion above states its own rate.

Per-Model Detail (n=9)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$750.490.50xyesTBVPS $384.20 × 1.95x (ROE (TTM) 13.3% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption))
Relative ValuationRelative$540.210.70xyesP/E 11x (static sector reference · 2026-04), scenarios: 9.3x / 11.0x / 12.7x (bear / base = reference held flat / bull), EV/EBITDA 10x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$552.490.68xyesBV/sh $384.20, ROE (TTM) 13.3%, ke 9.3%
Two-Stage Excess ReturnAsset$656.600.58xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$228.561.66xyesRev $17.3B, growth -1% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.9x / 1.0x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$1718.850.22xyesEPS $49.11, growth 35% (input: historical EPS growth), PEG=0.21 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$651.560.58xyes√(22.5 × EPS $49.11 × BVPS $384.20) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$1584.620.24xyesEPS $49.11 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative$1841.620.21xyesEPS $49.11 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$530.920.71xyesEPS $49.11 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (dilution)0.6%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

Everest trades at roughly 0.9x book ($335.74 against book value per share near $384) and about 6.8x earnings while earning a double-digit return on equity, a value-trap-looking price for an insurer whose underwriting is improving, not deteriorating.

The first quarter of 2026 showed a sharp turnaround: the combined ratio fell to 91.2% from 102.7%, net income jumped to $16.21 per diluted share from $4.90, the reinsurance treaty book ran an 87.2% combined ratio, and book value per share rose 4% adjusted to $393.02 with favorable short-tail reserve development.

Bull Case

The counterintuitive fact about Everest Group is that it trades below its own book value while earning a double-digit return on that book, a combination that should not persist for a healthy insurer. At $335.74 (June 27, 2026) against book value per share of about $384, the stock changes hands at roughly 0.9x book, and on trailing earnings of $49.11 per share it sits near 6.8x earnings. That is value-trap pricing for a business that just posted one of its best underwriting quarters in years. The metric that does not fit the cheap-for-a-reason narrative is the underwriting result itself: it is improving sharply, not deteriorating.

The first quarter of 2026 made the turnaround concrete. The consolidated combined ratio fell to 91.2% from 102.7% a year earlier, meaning the business swung from underwriting at a loss to a healthy profit, and net income jumped to $653 million, or $16.21 per diluted share, from $4.90 a year before. The reinsurance treaty book, which is three-quarters of the company, achieved a combined ratio of 87.2% and underwriting income of $315 million at an 85.0% attritional ratio. Reserves moved in the right direction too, with roughly $33 million of net favorable prior-year development, after the painful reserve strengthening that depressed prior periods (the 10-K details the increases in attritional and prior-year losses that drove the earlier weakness, accession 0001095073-26-000006). Book value per share, adjusted for dividends and mark-to-market, rose 4% in the quarter to $393.02.

The valuation supports the value case from every angle that fits an insurer. The price is supported by the asset, earnings-power, and relative-multiple families, with only the growth-DCF (which keys off flat near-term revenue) calling it expensive. The inversion reads the price as asking the insurer to sustain only about an 8.1% return on equity, below the roughly 10% to 13% it has recently earned. When the market prices a company for a return below what it is delivering, and the underwriting is improving, the discount is the opportunity.

Bear Case

The bear case for any reinsurer is the cycle, and Everest is a sharp example of why this quarter's number is not next year's. A 91.2% combined ratio is excellent, but reinsurance underwriting margins are at or near a cyclical peak after several years of hard pricing, and hard markets soften. When rates roll over and capacity returns, the attritional combined ratio that produced $315 million of treaty underwriting income widens, and a business levered to underwriting margin sees profit fall faster than premiums. The strong quarter is the top of the cycle, not the new baseline, and the price that looks cheap on peak earnings looks less cheap on mid-cycle earnings.

Reserve adequacy is the structural worry that the recent past makes impossible to ignore. Everest took meaningful reserve strengthening in prior periods, and the 10-K is explicit about the drivers, citing a $308 million increase in current-year attritional losses and net unfavorable development tied to events including the war in Russia and Ukraine reflected in the prior-year incurred loss line (FY2025 10-K, accession 0001095073-26-000006). Long-tail casualty reserves are estimates that can prove inadequate years after the policies were written, and a company that just had to strengthen reserves has demonstrated that its prior estimates were too low. The favorable $33 million of development this quarter came from short-tail lines; the long-tail question is not yet answered, and another reserve charge would hit both earnings and book value directly.

Catastrophe volatility is the third leg, and it is the reason the price-to-book discount exists. As a property-catastrophe reinsurer, Everest's results can swing violently on a single bad hurricane or earthquake season; the clean first quarter benefited from light catastrophe activity that will not repeat every quarter. The market's roughly 0.9x book multiple, in the lower half of the peer group, is its way of pricing that volatility and the recent reserve history. The growth-DCF frame marks the stock near $203, well below the price, reflecting flat-to-negative near-term revenue growth. The bear conclusion is that Everest is cheap on trailing numbers precisely because those numbers are cyclically elevated and the reserve and catastrophe risks are real, and a buyer is being paid to take exactly those risks.

Valuation

An insurer is worth the return it earns on its capital, so Everest is read off price-to-book, not an operating multiple. At $335.74 against book value per share of about $384, the stock trades at roughly 0.9x book, and the market is implicitly asking the company to sustain a return on equity of only about 8.1%. The reference point is favorable: Everest has recently been earning around 10% to 13%, so the price requires less than the business has delivered.

The insurer-appropriate models all sit well above the price. The only model that marks below the price is the discounted-future-market-cap frame near $203, which keys off flat-to-negative near-term revenue and is the wrong lens for a book-value business.

How unusual is the implied bet? Against Everest's own record, the assumed roughly 8.1% return is comfortably within reach. Against peers, the 0.9x book multiple sits in the lower half of the insurance group. Against history, about 82% of firms earning this return sustained it over a long horizon, a relatively favorable base rate. The honest read: on book value and current earning power, Everest is materially cheap, and the discount is the market's compensation for catastrophe volatility and the reserve risk that recent strengthening made salient. The valuation question is not whether the models say cheap, they clearly do, but whether mid-cycle underwriting and reserve adequacy justify closing the gap to book.

Catalysts

The most recent print was the first-quarter 2026 report, a strong one. The consolidated combined ratio fell to 91.2% from 102.7% a year earlier, net income rose to $653 million, or $16.21 per diluted share, from $4.90, and the reinsurance treaty segment posted an 87.2% combined ratio with $315 million of underwriting income. The company reported roughly $33 million of net favorable prior-year reserve development from short-tail lines, and book value per share rose to $383.75, or $393.02 adjusted for dividends and mark-to-market, up 4%.

The recurring catalysts for a reinsurer are the reserve mark and the catastrophe season. Each quarter's prior-year development (favorable or unfavorable) directly moves earnings and book value, and the absence of further long-tail casualty strengthening would help close the discount to book. The mid-year reinsurance renewal seasons (notably the June and July property-catastrophe renewals) set pricing for the largest part of the book and are key signals on whether the hard market is holding or softening.

The forward thesis tracks the underwriting cycle, reserve adequacy, and catastrophe experience. The supportive drivers are the improved combined ratio, favorable short-tail development, and a price well below book. The risks are a softening reinsurance market that compresses margins, the possibility of further long-tail reserve charges after the recent strengthening, and the inherent volatility of a property-catastrophe book. Watch the quarterly combined ratio against the 91.2% mark, the direction and source of prior-year reserve development, renewal pricing at the mid-year seasons, and catastrophe losses, since those determine whether the market closes the gap between the price and the insurer's book-value worth.

Sources: Everest Group Q1 2026 results and 8-K (sec.gov, stocktitan.net); Everest Group Q1 2026 earnings transcript (Motley Fool, AOL); Q1 combined ratio analysis (Simply Wall St, Sahm Capital).

Peer Cohorts (Per Segment, With Filing Citations)

Reinsurance (reported)

Insurance (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive EG report on boothcheck