Tuesday 29 October 2013

Analysis of Hannover Rückversicherung

A German reinsurance company

Company: Hannover Rückversicherung

Business: A German reinsurance company. It is divided into two business group: Non-Life Reinsurance (with a subdivision that focus strongly on North America and Germany) and the second one is Life and Health Reinsurance. The two division have fairly equal revenue size.

Active: They claim they are one of the leading reinsurance companies in the world with world wide presence.

P/E: 8.3

Comment: Talanx an insurance company that are also on the MDax list owns 50.2% of Hannover Rückversicherung.

This company was analysed due to a comment that was written here.

contrarian values of P/E, P/B, ROE as well as dividend
The P/E is excellent with 8.3 and the P/B is ok with 1.2 even though I love it below 1. This means that it becomes a very clear buy according to Graham. The earnings to sales are pretty ok with 7% especially since MüRe only had 5%. The ROE is good with 14% but the book to debt is slightly too low for my taste with a ratio of 0.12. The yearly growth in the last five years has been excellent to say the least! 12.1% each year! Not bad, not bad at all. This leads to a motivated P/E around 28 to 32 which means that it is highly undervalued by the market also today... 1,5 years ago the shares were being traded around 35 €. They pay a very nice dividend of 4.4% which represents only 36.5% of the earnings so they should be able to keep that up.

Conclusion: I find this stock at least equally interesting to MüRe maybe even slightly more since they have had better yearly growth and have a better ROE. Most other key figures are pretty much the same. MüRe I already own and they are still so similar that I see no reason to either sell it or to have both but the stock will definitely be added to the Stocks of Interest list (with the next update) and if I would not have owned MüRe already I would probably have bought Hannover Rückversicherung instead.

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