The Lizard King loves insurance companies.  A well run insurance company benefits from “float”, the ability to invest its liabilities until they come due.  Today we are looking at a reinsurance firm, PartnerRe Ltd. (PRE).

PRE has the worst combined ratio performance of the six in our list at 94.2 (10 year average), which is still pretty good.  For every dollar of revenue 5.8 cents is “free money” with the rest being on loan until claims must be paid.  Partner Re will invest both in the meantime.  Where PRE shines is in growth of book value per share.  Ten year performance there is 239%.  So if we back out considerations of multiple expansion (and PRE has a lot of room for P/B expansion), we can expect a triple every decade.  Not too shabby.

PRE has the most attractive current valuation of our six insurance companies.  Price to sales comes in at 0.78 and price to book is 0.72 (we can buy a dollar’s worth of assets for 72 cents!)  This low valuation drives the highest dividend yield of our class at 2.40%.  PRE also treats shareholders well by buying back its own shares and is a safe play with no net debt.  Raptors will be glad to hear that options contracts for short dated expirys have good liquidity.

Devour your prey raptors!

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Insurance part 2 of 6 PartnerRe Ltd. (PRE)

Never miss another opportunity to devour prey!

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2 thoughts on “Insurance part 2 of 6 PartnerRe Ltd. (PRE)

    • April 23, 2015 at 4:51 pm
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      I don’t like to consider deals final until they are. If the deal falls through, PRE is still a huge buy. Sneak Peak: AXS is tomorrow’s pick! I’ve been careful to consider gains in book value on a per share basis as many insurance companies expand by diluting shareholders. AXS fits the bill. So if the deal goes through, potentially a double position in a (stronger version) of #3 on my list!

      Reply

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