Moreover, the company continues to rebalance its property portfolio, particularly within peak catastrophe zones, including the Southeast U.S., Mexico and Gulf of Mexico.

Prior to the release of the 2Q08 results, we have lowered our FY08E and FY09E EPS to $12.08 per share and $12.90 per share, respectively, from $12.58 per share and $13.00 per share previously. The shares of Everest Re trade at 0.86x its 1Q08 book value of $91.01 per share.

RE's valuation has continued to moderate from the 1.5x level exhibited nearly a year and a half ago, with Everest's 5-year average ROE remaining below the peer group average. Our new six-month price target of $84.70 per share, incorporates a peer multiple of 0.88x to our estimated Dec 31, 2008 book value of $98.50 per share.

Guangshen Chugs Along

Guangshen Railway Company (GSH) announced strong growth in revenue and assets for 2007 due to the acquisition of railway transportation assets from the Guangping Line. However, the company's first quarter profits declined due to higher costs and lower revenue, resulting from abnormal weather.

Although the company is well-positioned to leverage the railway growth opportunity in China, especially in Guangdong province, the government's price regulation for railway transportation would negatively affect the company's earnings when its costs increase. Overall, we are maintaining Hold rating on the stock.

The company is the sole railway service provider on the Guangzhou-Shenzhen corridor; therefore it does not face any direct competition from other railway service providers within its service territory. Guangshen Railway is the first wholly-fenced, high-speed railway with four parallel lines in China that allows the high-speed passenger trains and regular speed passenger and freight trains to run on separate lines. This substantially improved the company's transportation capacity.

However, the railway tariff is regulated by the Chinese government, which will negatively affect the company's earnings when its costs increase. With respect to passenger transportation, the company faces competition from bus services, whose fares are lower. Furthermore, buses can offer added convenience to passengers by departing from or arriving at locations outside their central terminals, such as hotels. Finally, with respect to freight transportation, the company faces increasing competition from truck transportation in the medium- and short-distance freight transportation market as the expressway and highway networks in the service region and neighboring areas have increasingly improved.

Marsh & McLennan Stays on Hold

Marsh & McLennan Companies Inc.'s (MMC) first-quarter operating earnings from continuing operations (excluding the goodwill impairment charge) came in at 41 cents per diluted share, compared to 47 cents in the prior-year quarter.