insurance

If you grow book value, particularly if your liabilities are short, you will grow market value.  Many reinsurance and insurance companies aim at growing fully convertible book value per share.

Fully convertible book value per share assumes that you invest your dividends in the common stock (without taxation), and thus compound your gains through reinvestment, taking account of dilution.  Hmmm… when will someone dream up the idea of structuring an insurance company as an MLP or a REIT?  I don’t think it is likely, but maybe someone could dream it up.

It also implies that all possible dilution is factored in from convertible preferred stock or convertible bonds.  Now insurance companies tend to trade near book value over the long run, so companies that can grow their book value rapidly and pay dividends can be interesting investments.  Particularly where the liabilities of the company are short — property reinsurance or personal lines insurance, growth in book value plus dividends tends to be a reliable indicator of value creation.

If liabilities are longer, it gets more questionable, because under-reserving becomes more likely — it is very hard to be certain of the reserving of long-dated or volatile coverages.

Anyway, here is a list of insurance companies, and how they have accumulated book value plus dividends over the past seven years.  Note that this is a mathematical calculation off a limited database, and that splits and M&A can throw this calculation off.  With that caveat, here is the list:

1, 234  - View Full Page
companytickersicimg_descmktcapGrowth of FCBV
Life Partners Holdings, Inc.LPHI64110712 – Insurance (Miscellaneous)

50.7

76%

Universal Insurance Holdings,UVE63310715 – Insurance (Property & Casualty)

185.2

75%

CNinsure Inc. (ADR)CISG64110712 – Insurance (Miscellaneous)

337.6

56%

Amtrust Financial Services, InAFSI63310715 – Insurance (Property & Casualty)

2,128.7

38%

Employers Holdings, Inc.EIG63310715 – Insurance (Property & Casualty)

652.6

32%

Enstar Group Ltd.ESGR63310715 – Insurance (Property & Casualty)

1,951.0

26%

Tower Group IncTWGP63310715 – Insurance (Property & Casualty)

734.8

25%

Amerisafe, Inc.AMSF63310715 – Insurance (Property & Casualty)

508.5

23%

Humana Inc.HUM63240706 – Insurance (Accident & Health)

11,297.2

21%

Allied World Assurance Co HoldAWH63310715 – Insurance (Property & Casualty)

2,856.1

21%

Arthur J. Gallagher & Co.AJG64110712 – Insurance (Miscellaneous)

4,441.2

20%

Willis Group Holdings PLCWSH64110712 – Insurance (Miscellaneous)

6,009.5

20%

China Life Insurance Company LLFC63110709 – Insurance (Life)

94,339.3

20%

ProAssurance CorporationPRA63310715 – Insurance (Property & Casualty)

2,698.5

19%

RenaissanceRe Holdings Ltd.RNR63310715 – Insurance (Property & Casualty)

3,949.8

18%

National Interstate CorporatioNATL63310715 – Insurance (Property & Casualty)

576.7

18%

Argo Group International HoldiAGII63310715 – Insurance (Property & Casualty)

910.3

17%

Brown & Brown, Inc.BRO64110712 – Insurance (Miscellaneous)

3,851.4

17%

AFLAC IncorporatedAFL63210706 – Insurance (Accident & Health)

24,134.6

16%

Endurance Specialty Holdings LENH63310715 – Insurance (Property & Casualty)

1,796.8

16%

W.R. Berkley CorporationWRB63310715 – Insurance (Property & Casualty)

5,455.7

15%

American Financial GroupAFG63310715 – Insurance (Property & Casualty)

3,772.7

15%

Horace Mann Educators CorporatHMN63310715 – Insurance (Property & Casualty)

830.9

15%

Eastern Insurance Holdings IncEIHI63110709 – Insurance (Life)

135.5

15%

Validus Holdings, Ltd.VR63310709 – Insurance (Life)

3,296.1

15%

CIGNA CorporationCI63240706 – Insurance (Accident & Health)

16,104.2

14%

Reinsurance Group of America IRGA63210706 – Insurance (Accident & Health)

4,143.2

14%

Safety Insurance Group, Inc.SAFT63310715 – Insurance (Property & Casualty)

715.6

14%

Chubb Corporation, TheCB63310715 – Insurance (Property & Casualty)

20,701.5

13%

Loews CorporationL63310715 – Insurance (Property & Casualty)

16,854.0

13%

ACE LimitedACE63510715 – Insurance (Property & Casualty)

28,285.6

13%

HCC Insurance Holdings, Inc.HCC63310715 – Insurance (Property & Casualty)

3,937.5

13%

Travelers Companies, Inc., TheTRV63310715 – Insurance (Property & Casualty)

29,108.4

13%

Coventry Health Care, Inc.CVH63240706 – Insurance (Accident & Health)

6,080.9

12%

Markel CorporationMKL6331