12/22/2010
I researched this as part of due diligence after placing my order for Markel possibly as an additional order. While I knew Markel was a company I really wanted to be part of, AGO & RNR came up as possible alternatives and I've generally had good luck with companies I come up with as possible alternatives.
Price at evaluation: 63.29
Valuation Ratios
Price/Earnings (TTM) . . . . . . 4.68x
Price/Sales (TTM) . . . . . . . . 2.02x
Price/Book (MRQ) . . . . . . . . 1.03x
Price/Cash Flow (TTM) . . . . . 3.46x
Patrick . . . . . . . 2.8
Davison . . . . . . 3/5:Target 66, fair value 78, unfavorable insider activity, low volatility
Benjamim . . . . . 4.8: 72.16 target, low volatility, high ROI, highly solvent, good dividend
Marcel . . . . . . . 2.5 from 3.5: don't buy, don't short sell
Thomas . . . . . . . 3/5: deteriorating Earnings, 10 mo. Average price 57.98
Saxon . . . . . . . 3.7
Vickers . . . . . . . . . . . . . Lots of selling, no acquisitions other than options exercised and immediately sold.
Institutions hold 90.43% of this stock.
RNR provides a dividend, if you're looking for that, though since I often reinvest dividends from stocks I'd rather they just reinvest that capital into their business like Markel does (if they can provide Growth).
What follows is a list of how much of the premiums they collected were payed out in claims each year (less than 100 is profit, greater than 100 is loss), reinsurance/individual:
2004 . . . . 95.1%/126.9%
2005 . . . . 148.7%/120.8%
2006 . . . . 34.5%/89.8%
2007 . . . . 44.8%/89.1% (59.3% combined)
2008 . . . . 69.0%/98.1% (79.0% combined)
2009 . . . .15.4%/105.5% (45.3% combined)
My trouble in this instance is that they seem to be cutting it somewhat close with their premiums, especially the individual, and since they are required to pay this money they put it in low yield, low risk, devices, with interest rates so low I don't see much room for money here. It's not a terrible company, but without the generational ownership, regular healthy margin on the insurance it provides (even if small), and a seaming inability to price premiums at a level that will keep them from going negative, it's no Markel and not really a company I want to be a part of. It's not even sexy, this is not a company that people are going to swing a spot light on to promote over valuation or even to reach that "fair" value any time soon. Still if you can get it at lower than book value, it'd be absolutely worth holding long term. I'd be a buyer around 54-58, but only expect the price to drop to ~59 unless they get investigated by the SEC for misstating yearly results like they did in 2007, then you could probably pick them up at a bargain. I don't really see any of that happening, I think they're in a fairly competitive market, and I think they are exposing themselves to too much risk. This one is basically increasing flat and for the level of risk I think it holds you can probably do better. Don't fool yourself though, this is not the poor man's Markel, this is the poor man's AIG (I am aware that AIG's market price is lower than RNR's at the time of this writing).
I researched this as part of due diligence after placing my order for Markel possibly as an additional order. While I knew Markel was a company I really wanted to be part of, AGO & RNR came up as possible alternatives and I've generally had good luck with companies I come up with as possible alternatives.
Price at evaluation: 63.29
Valuation Ratios
Price/Earnings (TTM) . . . . . . 4.68x
Price/Sales (TTM) . . . . . . . . 2.02x
Price/Book (MRQ) . . . . . . . . 1.03x
Price/Cash Flow (TTM) . . . . . 3.46x
Patrick . . . . . . . 2.8
Davison . . . . . . 3/5:Target 66, fair value 78, unfavorable insider activity, low volatility
Benjamim . . . . . 4.8: 72.16 target, low volatility, high ROI, highly solvent, good dividend
Marcel . . . . . . . 2.5 from 3.5: don't buy, don't short sell
Thomas . . . . . . . 3/5: deteriorating Earnings, 10 mo. Average price 57.98
Saxon . . . . . . . 3.7
Vickers . . . . . . . . . . . . . Lots of selling, no acquisitions other than options exercised and immediately sold.
Institutions hold 90.43% of this stock.
RNR provides a dividend, if you're looking for that, though since I often reinvest dividends from stocks I'd rather they just reinvest that capital into their business like Markel does (if they can provide Growth).
What follows is a list of how much of the premiums they collected were payed out in claims each year (less than 100 is profit, greater than 100 is loss), reinsurance/individual:
2004 . . . . 95.1%/126.9%
2005 . . . . 148.7%/120.8%
2006 . . . . 34.5%/89.8%
2007 . . . . 44.8%/89.1% (59.3% combined)
2008 . . . . 69.0%/98.1% (79.0% combined)
2009 . . . .15.4%/105.5% (45.3% combined)
My trouble in this instance is that they seem to be cutting it somewhat close with their premiums, especially the individual, and since they are required to pay this money they put it in low yield, low risk, devices, with interest rates so low I don't see much room for money here. It's not a terrible company, but without the generational ownership, regular healthy margin on the insurance it provides (even if small), and a seaming inability to price premiums at a level that will keep them from going negative, it's no Markel and not really a company I want to be a part of. It's not even sexy, this is not a company that people are going to swing a spot light on to promote over valuation or even to reach that "fair" value any time soon. Still if you can get it at lower than book value, it'd be absolutely worth holding long term. I'd be a buyer around 54-58, but only expect the price to drop to ~59 unless they get investigated by the SEC for misstating yearly results like they did in 2007, then you could probably pick them up at a bargain. I don't really see any of that happening, I think they're in a fairly competitive market, and I think they are exposing themselves to too much risk. This one is basically increasing flat and for the level of risk I think it holds you can probably do better. Don't fool yourself though, this is not the poor man's Markel, this is the poor man's AIG (I am aware that AIG's market price is lower than RNR's at the time of this writing).
Comments
Post a Comment