Everest Re Group, Ltd. (RE) intends to release its 3Q08 earnings later this month. The company continues to experience rate pressures resulting from increased competition, higher commissions, and increased retentions by the ceding companies. Competition continues with a greater intensity in the US than in the international markets.

However, the company's results should be able to benefit from its strong risk-adjusted capitalization, good long-term operating performance, strong traditional risk management capabilities, well-diversified product lines and excellent market profile as a leading global reinsurance franchise, going forward. Even so, our Hold recommendation on the shares remains in place, presently.

Prior to the release of RE's 3Q08 results, we are lowering our FY08 and FY09 EPS expectations to $11.13 per share and $12.20 per share, respectively, down from $11.63 per share and $12.75 per share previously. The shares of Everest Re trade at 0.80x its 2Q08 book value of $90.43 per share.

RE's valuation has continued to moderate from the 1.5x level exhibited about a year and a half ago, with Everest's 5-year average ROE remains below the peer group average. Our updated six-month price target of $78.00 per share (down from $84.55 per share), incorporates a multiple of 0.80x to our revised March 31, 2009 book value of $97.50 per share.