Investment opportunities in Insurance Brokers
The reinsurance business is by definition a B2B relationship. From this point of view, the transactions should be easy to digitize. There are a few operations to look at, all of which offer attractive long-term opportunities and attractive dividend yields.
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Swiss Re | SRENH | Switzerland | 25 % | 8.62 |
| Investment case: SwissRe is one of the world’s largest re-insurance companies. It has an attractive and well diversified portfolio of assets which generate regular outperformance resulting in the distribution of dividends well above the market average. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Aon Plc | AON | United States of America | 7 % | 5.78 |
| Investment case: Aon is a leading global provider of risk management, insurance and re-insurance brokerage services. The company has about 65,000 employees and generates revenues in the region of USD 12 billion. Client growth has been positive over the last few years and this has had a positive impact on the company’s profitability. Pricing trends are relatively negative, but should be compensated by efficiency programs. The company has a share buyback program running. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Beazley | BEZG | United Kingdom | 15 % | 4.81 |
| Investment case:Beazley is an international specialist insurance company; it has exposure to the UK, the US, and the Pacific region. Its re-insurance services include property, marine, professional and political risks. The company has about 800 highly specialist employees. Any move into the digital area could propel this relatively small operator into a new hemisphere. Yet, no such plans have been communicated to the greater public and therefore the company appears to be rather well priced at present given the risks it undertakes. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Hannover Re | HNRGn | Germany | 5 % | 6.90 |
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Investment case: Hannover Re is among the top five largest reinsurance companies. Its revenues are mainly generated in Europe (48%), North America (31%), and 21% from the rest of the world. The company has a relatively conservative management approach and is suffering from profitability issues. We therefore expect the company will lag behind its peer group in terms of digitation. |
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