RE
Everest Re Group, Ltd.
$351.28
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 42.7% below fair value
You pay
$351.28
Bear
$362.19
Fair
$612.82
Bull
$763.20
Bear
$362.19
+3.1%
ROTCE 7.7% → 1.02x TBV
Fair
$612.82
+74.5%
ROTCE 10.3% → 1.72x TBV
Bull
$763.20
+117.3%
ROTCE 11.8% → 2.14x TBV
Key Value Driver
ROTCE (10.3%) vs. cost of equity (7.7%)
Implied Market Multiple
0.99x
Summary
With ROTCE of 10.3% vs. 7.7% cost of equity, fair P/TBV is 1.72x on $356.24 tangible book, implying $612.82 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly