Everest Group (EG) has an attractive valuation amid a turnaround process under which it is exiting underperforming and volatile businesses that were clouding its results, RBC Capital Markets said in a note Tuesday.

The investment firm said it expects the underwriting streamlining process to go on, which may lead to some "bumps in the road" including the "elevated risk" of reserve charge in Q3. However, "growing investment income, stabilizing results and strong capital return are compelling at the current valuation," the note said.

RBC noted that in the last 18 months, the company has left several businesses via renewal rights agreements as well as business sales, which should lead to a "cleaner story."

The investment firm added that Bermuda names, and Everest in particular, are "undervalued as investors fail to recognize the increased floor ROEs due to investment income potential."

RBC noted Everest is generating about $2.1 billion of annual pre-tax net investment income. The investment firm said the net investment income is largely from Everest's "high quality investment portfolio, and we expect is sustainable indefinitely on the current capital base in this interest rate environment."

RBC started coverage of Everest with an outperform rating and $455 price target.

Price: 369.61, Change: +0.19, Percent Change: +0.05