Property & Casualty Reinsurance

Property &  Casualty Reinsurance
Components Performance/Risk
Period Return
-4.7%
Return Rank
Subpar
Risk Exposure
Below Average

Ultimate backstop of major climate events, such as hurricanes, US convecting storms and earthquakes, of macro-economic uncertainties and ongoing inflation, and of war, the reinsurance industry is battling uncertainty on a massive scale

Looking beyond volatility, hard-hitting, exposure to cumulative natural catastrophes and geopolitical risk, the industry is essentially defined by a thoughtful financial strategy, pricing the risk with care, structuring investment float in relation to the type of risk exposure and deploying the capital over – on average - extended pay-out periods

2023 reinsurance contracts negotiated with primary insurers are marked by sharp rate increases, extending the run-up engaged since 2017, specifically for the major risks covered by the leading reinsurers

Source - RPM US (May 2023)

 

Buffet’s Berkshire Hathaway  has tuned reinsurance to perfection, suspending disbelief with a float approaching $166bn at end Q2-2013, aided by rising yields - reaching $114 519 on a per share basis (supported by share repurchases)

The strategy so successfully put to work seems to attract two very different investors

  • cash rich investors such as private equity funds, unable to deploy their resources in an over-priced market, hoping for a better return
  • industrial concerns hoping to diversify and – when the time is ripe – to allocate some to the float to investments and acquisition strategies

The dynamics of the reinsurance sector are in for more surprises…

Theme Components
Name
Ticker
Sector
Industry
Cur. Price
Mkt. Cap
Performance
Momentum
Risk Rank
Risk Contrib
 
Chubb CB FinanceGlobal Insurance - Multi-line314.50123 B12.9% Neutral Low Risk
The Progressive Corporation PGR FinanceProperty & Casualty Insurance195.38114 B-14.8% Neutral Low Risk
James River Group Holdings JRVR FinanceProperty & Casualty Insurance3.96182 M-28.9% Sharp Down Above Average
Fairfax Financial Holdings FRFHF FinanceProperty & Casualty Insurance1,682.03--6.1% Neutral Low Risk
Everest Group EG FinanceReinsurance319.5013 B-3.0% Weak Down Low Risk
RenaissanceRe Holdings RNR FinanceReinsurance277.7312 B16.1% Weak Down Low Risk
Swiss Re (ADR) SSREY FinanceReinsurance40.58--6.3% Neutral Low Risk
Munich Re Group (ADR) MURGY FinanceReinsurance11.44--12.5% Neutral Low Risk
SCOR (ADR) SCRYY FinanceReinsurance3.78-14.9% Neutral Above Average
Berkshire Hathaway BRK_B ConglomeratesDiversified Conglomerates478.631,048 B-1.3% Neutral Low Risk
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