1. combined ratio
2. reserving adequacy
3. investment returns
4. competitive advantage & business model
5. management, incentive and capital allocation
6. financial strengthen: solvency II
7. valuation
Take one or two P&C insurance companies in TW as analysis examples.
hard to compile data for reserving adequacy from annual reports => assume conservative management style. at least, the government will bail out when something goes wrong.
similar business model, similar market condition, similar strategy => commodity business, no competitive advantage, low growth potential
valuation:
A company
1. estimated eps 1.41
2. PE range 12~15
target price is 16.92~21.15
B company
1. estimated eps 2.64
2. PE range 12~15
target price is 31.68~39.6
2. reserving adequacy
3. investment returns
4. competitive advantage & business model
5. management, incentive and capital allocation
6. financial strengthen: solvency II
7. valuation
Take one or two P&C insurance companies in TW as analysis examples.
| A company | B company | |||
| combined ratio | investment return | combined ratio | investment return | |
| 2013 | 94.59% | 3.40% | 92.54% | 2.96% |
| 2012 | 100.91% | 4.44% | 98.30% | 1.04% |
| 2011 | 97.40% | -0.69% | 96.31% | 0.94% |
| 2010 | 100.82% | 5.85% | 99.23% | 7.12% |
| 2009 | 90.94% | 10.21% | ||
| 2008 | 89.47% | -5.89% | ||
hard to compile data for reserving adequacy from annual reports => assume conservative management style. at least, the government will bail out when something goes wrong.
similar business model, similar market condition, similar strategy => commodity business, no competitive advantage, low growth potential
valuation:
A company
1. estimated eps 1.41
2. PE range 12~15
target price is 16.92~21.15
B company
1. estimated eps 2.64
2. PE range 12~15
target price is 31.68~39.6
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