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Strategies & Market Trends : Value Investing
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To: MCsweet who wrote (44215)9/6/2011 9:39:41 AM
From: Jurgis Bekepuris  Read Replies (1) of 78595
 
Which P&C insurers & reinsurers are trading at PEs < 10 and below book? From what I see most of them have huge losses this year, so no PEs at all. And WTM is also showing losses for H1/2011, so also no PE. Even BRK is having insurance losses this year, and presumably you'll agree that they are among the best.

In general, I'm afraid that PEs mean very little for P/C (re)insurers. The losses are huge and lumpy and low PEs usually show short-term good pricing environment and a year with no cats. Companies like BRK that invest float into securities may show low PEs in a bad year if the securities perform greatly. The insurers investing in fixed income very rarely can show positive results in a bad year.

So I disagree with your argument. The real question about WTM is whether they can continue their long term book growth outperformance (13% a year...).
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