Although Arch Capital (NASDAQ:ACGL)
remains a very well-regarded insurance company, the last year hasn't
been so friendly to this company or its peer group. A lot of
contributing factors have been at play, including large cat losses in
2017, rising costs, regulatory/competitive changes and so on, pushing
the shares down more than 10% and below the performance of peers like Everest Re (NYSE:RE), RenRe (NYSE:RNR), and W.R. Berkley (NYSE:WRB).
When I last wrote
about Arch Capital, I said I preferred to wait in the hopes of getting
an opportunity to buy the shares in the mid-to-low $80's. That
opportunity has arrived, even though analyst estimates have continued to
head higher. While these stocks generally don't perform especially well
during periods of higher rates (which may seem counter-intuitive given
the benefits to their investment income), and pricing power is still
limited, I think this may be an opportunity to start a position. Arch
Capital looks priced to generate double-digit annual returns from here
and this has been one of the best-run insurance companies in the
business - a trend I expect to continue, and to continue to benefit
shareholders, into the future.
Read more here:
Arch Capital Sliding Back To An Interesting Long-Term Valuation
No comments:
Post a Comment