Endurance Specialty Holdings (NYSE:ENH) hasn't emerged as a leader of the insurance pack, but it has done okay since my last write-up on the company in June of 2015. With the shares up around 5% (excluding dividends), Endurance has outdone the likes of Aspen (NYSE:AHL) and XL Group (NYSE:XL), but hasn't quite kept up with top-notch players like Arch Capital (NASDAQ:ACGL), RenRe (NYSE:RNR), W. R. Berkley (NYSE:WRB), or Hartford (NYSE:HIG).
In my opinion, Endurance has gotten itself off to a good start with the integration of Montpelier Re (NYSE:MRH),
and I like how the company has been repositioning its business and risk
exposures in the reinsurance segment. On the insurance side, the
company is writing a lot of business and looking to grow in markets like
aviation and international casualty. While a drive for scale is
understandable, expanding the business in a period of soft rates carries
with it some risks to future profits.
The market has established an undesirable trade-off for
me within the insurance sector - the stocks I like best aren't very
cheap (if cheap at all), and the ones that are undervalued have some
risks and "yeah, but..." attached to them. Such is the case with
Endurance. I don't think my expectations are all that ambitious
(long-term earnings growth around 5%, with a 10% ROE) and the fair value
of $67 to $70 holds some appeal, but I can't muster together a rousing
Buy case for the stock right now.
Continue here:
Endurance Specialty Pushing On Through Soft Markets
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