Strong sector performance has led to a lack of quality insurance
companies trading at any meaningful discount to fair value. Property
catastrophe reinsurance maven RenaissanceRe (NYSE: RNR )
, or RenRe, looks like a bit of an exception. Of course, exceptions
elicit the question, "What's different here?" In the case of RenRe, it
looks like investors are concerned about the acknowledged weakness in
catastrophe premiums next year, as well as the possibility that the
favorable reserve development well has started running dry.
Next year will almost certainly be a down year for catastrophe
reinsurance premiums, but I think investors may be acting a little
hastily in assuming that RenRe's growth in specialty and Lloyd's can't
cushion the blow. Moreover, I think RenRe, along with Arch Capital (NASDAQ: ACGL ) and Axis Capital (NYSE: AXS )
, is in on the very highest level in terms of management quality and
underwriting skill. Perhaps it's smarter to wait for the insurance
sector as a whole to pull back, but RenRe's relative underperformance
makes it more interesting to me these days.
Read the full article here:
A Long-Proven Winner Is Being Underestimated
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