Who is Insuring the Insurers?

Page 1 of 2

With the memory of Hurricane Sandy still fresh for many of those affected by last October’s tropical storm, insurance claims continue to roll in for those seeking reprieve for damages. While a largely negative event for insurance companies, most do not assume all of these risks and are able to pass on a significant amount to a secondary sector, known as the reinsurance industry. Reinsurers exist to help spread risk over multiple parties and thus better absorb the financial setbacks of unforeseen events. One of the most preeminent reinsurance players is Warren Buffet, and his interests have swelled into the billions of dollars, primarily through his Berkshire Hathaway holdings that include GEICO and General Re. (Read more about one of his reinsurance holdings that is currently in hot water.)

Warren Buffett portrait

The types of reinsurance vary across providers and depend heavily on the primary insurers they service. The size of liabilities, unforeseen events (i.e. weather-related), and solvency issues can create varying risk profiles and potential dips for buy-and-hold investors. However, buying opportunities exist in this sector, whose price-to book ratios have typically been seen above 1.00. We have compiled a list of five reinsurers that compete in the same spaces and have similar market capitalizations of $4-6 billion:

Everest Re Group (NYSE:RE) maintains operations primarily in the life, property, and casualty insurance. Investors who bought in this time last year netted the most impressive gain amongst the stocks in our list, garnering over 33%. Despite suffering a $12 loss during Sandy, RE has recovered to trade near 52-week highs. This shouldn’t deter value buyers however; Everest has both the highest EPS and lowest PEG ratio of our group, which we see as a strong indicator of further upside potential. Sell-side analysts agree, with the majority advocating both accumulation and holding.

A second player is PartnerRe Ltd (NYSE:PRE), a $5.8bn company who also has room to grow relative to their book value. Quarterly revenue grew almost 10% over the same quarter in 2011, and similar to Everest Re, the stock is trading near yearly highs. Dallas-based hedge fund manager Clint Carlson has over $16mm employed in PRE. Consensus estimates hint that the current price per share is the most aggressive of the group, supported by a high forward P/E and near parity of current price and analyst targets. Despite this, PRE gains a few notches in attractiveness as a buy-and-hold due to its high dividend yield.

Continue reading to see which other three reinsurers round out our list.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!