Citi downgraded Everest Group to Neutral from Buy with a price target of $375, down from $452. To meet its margin targets, the company needs to accelerate attritional margin improvement or reserve releases, or meaningfully beat on catastrophes, the analyst tells investors in a research note. The firm believes skepticism on Everest Group’s reserve strength may lessen the perceived quality of attritional beats or reserve releases. The company’s aggressive investment portfolio repositioning in Q4 should boost returns, but it also increases the perception of risk that there are potentially fewer higher quality underwriting margin levers to pull to meet guidance, says Citi.
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