My favorite industry for new investment is insurance.  A well run insurance company gets to invest free money, known as float, at no or even negative cost of funds.  My second most favorite insurance company at the moment is W.R. Berkley Corporation (WRB).

WRB has strong underwriting performance with a 10 year average combined ratio of 93.2.  Six point eight cents out of every dollar of revenue is free money the company can invest for the long term.  On the valuation front, WRB is attractive priced.  Price to sales is 1.38 and price to book is a very low 0.88.  When you can get a quality company for 12% below liquidation, you have a real bargain on your hands.  Dividend yield is 0.90%.

In addition to paying a dividend yield, Berkley has grown increasingly aggressive over the last several years at buying back shares of it own stock.  There is also then ten year performance in terms of book value per share growth which comes in at 305%.  That is an 11.8% compounded annual growth rate.  Not too shabby for what is ordinarily though of as a boring industry.  This is a compounding machine that is available at a fire sale price.

Devour your prey raptors!

Insurance Part 5 of 6 W.R. Berkley Corporation (WRB)

Never miss another opportunity to devour prey!

Leave a Reply

Your email address will not be published. Required fields are marked *

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.