Allied World Assurance (NYSE:AWH) has done pretty well since last I wrote about this small specialty insurance company. The shares have risen more than 20% since that late April 2014 article, basically matching fellow specialty underwriter W.R. Berkley (NYSE:WRB) and surpassing the likes of Arch Capital (NASDAQ:ACGL), ACE (NYSE:ACE), and Aspen (NYSE:AHL) that have all seen sub-10% returns over that time.
Every insurance story offers its own little twists. Arch Capital is looking to grow its mortgage insurance business, while ACE is looking to overseas markets and Aspen is looking forward to achieving the benefits of scale
as numerous relatively new business lines reach scale. For Allied
World, there would still seem to be many attractive market entry/share
expansion opportunities (even as rates weaken) and the company's balance
sheet appears to be in very good shape.
I do have some concerns
that the business that Allied World is writing today won't be as
profitable as the business it wrote over the last few years and the
sizable reserve releases will start to shrink, but that's a common
industry concern now. That said, I like the company's leverage to
specialty lines and overseas markets and the shares do look undervalued
now.
Read the full article here:
Allied World Offers A Healthy Balance Sheet, But Market Conditions Are Tough
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