Tuesday 9 September 2014

Analysis of Hannover Rückversicherung 2014

Hannover Rückversicherung, a German reinsurance company

Company: Hannover Rückversicherung

ISIN DE0008402215 | WKN 840221      

Business: A German reinsurance company. Nothing much has changed since the last analysis so it is divided into two business group but this time it is: P&C Reinsurance (with a subdivision that focus strongly on North America, Germany, Austria, Switzerland, Italy and French speaking countries) 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: 8.9

Here you can find the previous analysis of Hannover Rückversicherung.

Contrarian values of P/E, P/B, ROE as well as dividend for Hannover Rückversicherung

The P/E for Hannover Rückversicherung is excellent with 8.9 and the P/B is ok with 1.3 which gives us a very clear buy signal from Graham. The earnings to sales are ok with 6% and the ROE is pretty decent with almost 15%. The book to debt ratio I do not like with 0.12 but it is in line with the competitors in the business.
In the last six years they have had an excellent revenue growth of 9.2% (went back last year though!) which then gives us a motivated P/E of 22 to 26 which means that Hannover Rückversicherung is highly undervalued on the market today.
They pay an excellent dividend of 4.8% which represents 42% of their earnings so fully acceptable!

Conclusion: Graham is still excited about Hannover Rückversicherung and I equally much. The P/E, P/B, ROE and dividend are all excellent. They are still to 50.2% owned by Talanx so they have a solid shareholder as well. So I see no reason for why someone should not buy HaRe today. I do however understand if one wants to wait until a big accident happen before stepping in which is what I personally wait for before buying more of MüRe. On the Stocks of Interest list they moved a few places down due to decreased revenue growth but they are still there.

If this analysis is outdated then you can request a new one.

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