Screening for potential investments in the financial sector, I entered the following simple criteria:
- Price/Book Value < 3
- Return on Equity > 15%
AmTrust Financial (AFSI) was one of the first results on my list due to the ticker and I decided to take a deeper look. Overall, I was very impressed with what I found.
Overview and Business Model
AmTrust is a $2.6B global property and casualty insurer that sells to underserved, niche customer groups. The business model seems straightforward and compelling:
- Enter niche, neglected insurance markets with lower than average industry combined ratios and penetration.
- Markets consist mostly of small businesses resulting in a high volume of small policies that the company manages efficiently by streamlining
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